PARTIES AND THAT SINCE APPELLEE HAD NOT PERFORMED ITS OBLIGATIONS UNDER THIS ARRANGEMENT THE APPELLANT IN TURN WAS UNDER NO OBLIGATION TO ANNOTATE THE RESTRICTIVE PROHIBITIONS ON THE BACK OF THE TITLE.
Appellants anchor their appeal on the proposition that the Bel-Air Village area, contrary to plaintiff- appellee's pretension of being a strictly residential zone, is in fact commercial and characterize the restrictions contained in appellant Filley's deed of sale from the appellee as completely outmoded, which have lost all relevance to the present-day realities in Makati, now the premier business hub of the nation, where there is a proliferation of numerous commercial enterprises established through the years, in fact even within the heart of so-called "residential" villages. Thus, it may be said that appellants base their position on the inexorable march of progress which has rendered at naught the continued efficacy of the restrictions. Appellant on the other hand, relies on a rigid interpretation of the contractual stipulations agreed upon with appellant Filley, in effect arguing that the restrictions are valid ad infinitum.
The lower court quite properly found that other commercial establishments exist in the same area (in fact, on the same street) but ignored it just the same and said-
The fact that defendants were able to prove the existence of several commercial establishments inside the village does not exempt them from liability for violating some of the restrictions evidently choosing to accord primacy to contractual stipulation. 17
x x x x x x x x x
The Court of Appeals 18 overturned the lower court, 19 likewise based on AC-G.R. No. 66649. The respondent Court observed also that J. Romero & Associates had been given authority to open a commercial office by the Human Settlements Regulatory Commission.
V. G.R. No. 82281
The facts of this case have been based on stipulation. We quote:
COMES NOW, the Parties, assisted by their respective counsel and to this Honorable Court, respectfully enter into the following stipulations of facts, to wit:
1. The parties admit the personal circumstances of each other as well as their capacities to sue and be sued.
2. The parties admit that plaintiff BAVA for short) is the legally constituted homeowners' association in Bel-Air Subdivision, Makati, Metro Manila.
3. The parties admit that defendant Violets Moncal is the registered owner of a parcel of land with a residential house constructed thereon situated at No. 104 Jupiter Street, Bel-Air Village, Makati, Metro Manila; that as such lot owner, she is a member of the plaintiff association.
4. The parties admit that defendant Majal Development Corporation (Majal for short) is the lessee of defendant Moncal's house and lot located at No. 104 Jupiter Street.
5. The parties admit that a deed restrictions is annotated on the title of defendant Moncal, which provides, among others, that the lot in question must be used only for residential purposes;' that at time Moncal purchased her aforesaid lot in 1959 said deed restrictions was already annotated in the said title.
6. The parties admit that when Moncal leased her subject property to Majal, she did not secure the consent of BAVA to lease the said house and lot to the present lessee.
7. The parties admit that along Jupiter Street and on the same side where Moncal's property is located, there are restaurants, clinics placement or employment agencies and other commercial or business establishments. These establishments, however, were sued by BAVA in the proper court.
8. The parties admit that at the time Moncal purchased the subject property from the Makati Development Corporation, there was a perimeter wall, running along Jupiter Street, which wall was constructed by the subdivision owner; that at that time the gates of the entrances to Jupiter Street were closed to public traffic. In short, the entire length of Jupiter which was inside the perimeter wall was not then open to public traffic
9. The parties admit that subsequent thereto, Ayala tore down the perimeter wall to give way to the commercial building fronting Buendia Avenue (now Gil J. Puyat Avenue).
10. The parties admit that on August 12, 1977, the Mayor of Makati forcibly opened and removed the street gates constructed on Jupiter Street and Reposo Street, thereby opening said streets to the public.
11. The parties admit plaintiffs letters of October 10, 23 and 31, 1984; as well as defendants' letters-reply dated October 17 and 29, 1984. 20
x x x x x x x x x
The trial court 21 dismissed the petitioner's complaint, a dismissal affirmed on appeal, 22 According to the appellate court, the opening of Jupiter Street to human and vehicular traffic, and the commercialization of the Municipality of Makati in general, were circumstances that had made compliance by Moncal with the aforesaid "deed restrictions" "extremely difficult and unreasonable," 23 a development that had excused compliance altogether under Article 1267 of the Civil Code.
VI. The cases before the Court; the Court's decision.
In brief, G.R. Nos. 74376, 76394, 78182, and 82281 are efforts to enforce the "deed restrictions" in question against specific residents (private respondents in the petitions) of Jupiter Street and with respect to G.R. No. 78182, Reposo Street. The private respondents are alleged to have converted their residences into commercial establishments (a restaurant in G.R. No. 74376, a bakery and coffee shop in G.R. No. 76394, an advertising firm in G.R. No. 78182; and a construction company, apparently, in G.R. No. 82281) in violation of the said restrictions. 24
Their mother case, G. R. No. 71169 is, on the other hand, a petition to hold the vendor itself, Ayala Corporation (formerly Makati Development Corporation), liable for tearing down the perimeter wall along Jupiter Street that had therefore closed its commercial section from the residences of Bel-Air Village and ushering in, as a consequence, the full "commercialization" of Jupiter Street, in violation of the very restrictions it had authored.
As We indicated, the Court of Appeals dismissed all five appeals on the basis primarily of its ruling in AC-G.R. No. 66649, "Bel-Air Village, Inc. v. Hy-Land Realty Development Corporation, et al.," in which the appellate court explicitly rejected claims under the same 'deed restrictions" as a result of Ordinance No. 81 enacted by the Government of the Municipality of Makati, as well as Comprehensive Zoning Ordinance No. 8101 promulgated by the Metropolitan Manila Commission, which two ordinances allegedly allowed the use of Jupiter Street both for residential and commercial purposes. It was likewise held that these twin measures were valid as a legitimate exercise of police power.
The Court of Appeals' reliance on Ordinance Nos. 81. and 8101 is now assailed in these petitions, particularly the Sangalang, et al. petition.
Aside from this fundamental issue, the petitioners likewise raise procedural questions. G.R. No. 71169, the mother case, begins with one.
1. G.R. No. 71169
In this petition, the following questions are specifically put to the Court:
May the Honorable Intermediate Appellate Court reverse the decision of the trial court on issues which were neither raised by AYALA in its Answers either to the Complaint or Supplemental Complaint nor specifically assigned as one of the alleged errors on appeal? 25
May the Honorable Intermediate Appellate Court arbitrarily ignore the decisive findings of fact of the trial court, even if uncontradicted and/or documented, and premised mainly on its own unsupported conclusions totally reverse the trial court's decision? 26
May the Honorable Intermediate Appellate Court disregard the trial court's documented findings that respondent Ayala for its own self-interest and commercial purposes contrived in bad faith to do away with the Jupiter Street perimeter wall it put up three times which wall was really intended to separate the residential from the commercial areas and thereby insure the privacy and security of Bel Air Village pursuant to respondent Ayala's express continuing representation and/or covenant to do so? 27
a.
The first question represents an attack on the appellate court's reliance on Ordinances Nos. 81 and 81-01, a matter not supposedly tak
en up at the trial or assigned as an error on appeal. As a rule, the Court of Appeals (then the Intermediate Appellate Court) may determine only such questions as have been properly raised to it, yet, this is not an inflexible rule of procedure. In Hernandez v. Andal, 28 it was stated that "an unassigned error closely related to an error properly assigned, or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error." 29
In Baquiran v. Court of Appeals, 30 we referred to the " modern trend of procedure . . . according] the courts broad discretionary power" 31 and in which we allowed consideration of matters "having some bearing on the issue submitted which the parties failed to raise or the lower court ignore[d]. 32 And in Vda. de Javellana v. Court of Appeals, 33 we permitted the consideration of a 'patent error' of the trial court by the Court of Appeals under Section 7, of Rule 51, of the Rules of Court, 34 although such an error had not been raised in the brief. But what we note is the fact that the Ayala Corporation did raise the zoning measures as affirmative defenses, first in its answers 35 and second, in its brief, 36 and submitted at the trial as exhibits. 37 There is accordingly no cause for complaint on the part of the petitioners for Ayala's violation of the Rules. But while there was reason for the consideration, on appeal, of the said zoning ordinances in question, this Court nevertheless finds as inaccurate the Court of Appeals' holding that such measures, had "in effect, [made] Jupiter Street ... a street which could be used not only for residential purposes," 38 and that "[It lost its character as a street for the exclusive benefit of those residing in Bel-Air Village completely." 39
Among other things, there is a recognition under both Ordinances Nos. 81 and 8 1-01 that Jupiter Street lies as the boundary between Bel-Air Village and Ayala Corporation's commercial section. And since 1957, it had been considered as a boundary not as a part of either the residential or commercial zones of Ayala Corporation's real estate development projects. Thus, the Bel-Air Village Association's articles of incorporation state that Bel-Air Village is 'bounded on the NE., from Amapola St., to de los Santos Ave., by Estrella St., on the SE from Extrella St., to Pedestrian Lane by E. De los Santos Ave., on the SW., from Pedestrian Lane to Reposo St., by Jupiter Street
. . . . 40 Hence, it cannot be said to have been "for the exclusive benefit" of Bel-Air Village residents.
We come to the perimeter wall then standing on the commercial side of Jupiter Street the destruction of which opened the street to the public. The petitioners contend that the opening of the thoroughfare had opened, in turn, the floodgates to the commercialization of Bel-Air Village. The wall, so they allege, was designed precisely to protect the peace and privacy of Bel-Air Village residents from the din and uproar of mercantile pursuits, and that the Ayala Corporation had committed itself to maintain it. It was the opinion of the Court of Appeals, as we said, that Ayala's liability therefor, if one existed, had been overtaken by the passage of Ordinances Nos. 81 and 82-01, opening Jupiter Street to commerce.
It is our ruling, we reiterate, that Jupiter Street lies as a mere boundary, a fact acknowledged by the authorities of Makati and the National Government and, as a scrutiny of the records themselves reveals, by the petitioners themselves, as the articles of incorporation of Bel-Air Village Association itself would confirm. As a consequence, Jupiter Street was intended for the use by both -the commercial and residential blocks. It was not originally constructed, therefore, for the exclusive use of either block, least of all the residents of Bel-Air Village, but, we repeat, in favor of both, as distinguished from the general public.
When the wall was erected in 1966 and rebuilt twice, in 1970 and 1972, it was not for the purpose of physically separating the two blocks. According to Ayala Corporation, it was put up to enable the Bel-Air Village Association "better control of the security in the area, 41 and as the Ayala Corporation's "show of goodwill " 42 a view we find acceptable in the premises. For it cannot be denied that at that time, the commercial area was vacant, "open for [sic] animals and people to have access to Bel-Air Village." 43 There was hence a necessity for a wall.
In any case, we find the petitioners' theory, that maintaining the wall was a matter of a contractual obligation on the part of Ayala, to be pure conjecture. The records do not establish the existence of such a purported commitment. For one, the subdivision plans submitted did not mention anything about it. For another, there is nothing in the "deed restrictions" that would point to any covenant regarding the construction of a wall. There is no representation or promise whatsoever therein to that effect.
With the construction of the commercial buildings in 1974, the reason for which the wall was built- to secure Bel-Air Village from interlopers had naturally ceased to exist. The buildings themselves had provided formidable curtains of security for the residents. It should be noted that the commercial lot buyers themselves were forced to demolish parts of the wall to gain access to Jupiter Street, which they had after all equal right to use.
In fine, we cannot hold the Ayala Corporation liable for damages for a commitment it did not make, much less for alleged resort to machinations in evading it. The records, on the contrary, will show that the Bel-Air Village Association had been informed, at the very outset, about the impending use of Jupiter Street by commercial lot buyers. We quote:
x x x x x x x x x
1. Exh. I of appellee, the memorandum of Mr. Carmelo Caluag, President of BAVA, dated May 10, 1972, informing the BAVA Board of Governors and Barrio Council members about the future use of Jupiter Street by the lot owners fronting Buendia Avenue. The use of Jupiter Street by the owners of the commercial lots would necessarily require the demolition of the wall along the commercial block adjoining Jupiter Street.
2. Exh. J of appellee, the minutes of the joint meeting of BAVA Board of Governors and the Bel-Air Barrio Council where the matter that "Buendia lot owners will have equal rights to use Jupiter Street," and that Ayala's "plans about the sale of lots and use of Jupiter Street" were precisely taken up. This confirms that from the start BAVA was informed that the commercial lot owners will use Jupiter Street and that necessarily the wall along Jupiter Street would be demolished.
3. Exh. 10, the letter of Mr. Demetrio Copuyoc to the President of BAVA, dated May 16, 1972, expressly stating that vehicular entrance and exit to the commercial lots would be allowed along Jupiter and side streets.
4. Exhs. 27, 27-A, 27-B, the letter of Atty. Salvador J. Lorayes dated June 30, 1972, with enclosed copy of proposed restriction for the commercial lots to BAVA. He proposed restriction again expressly stated that "Vehicular entrances and exits are allowed thru Jupiter and any side streets."
5. Exh. L of appellee, the minutes of the meeting of the members of BAVA, dated August 26, 1972, where it is stated "Recently, Ayala Corporation informed the Board that the lots fronting Buendia Avenue will soon be offered for sale, and that future lot owners will be given equal rights to use Jupiter Street as well as members of the Association."
6. Exh. 25, the letter of Atty. Lorayes dated September 25, 1972, informing BAVA of the widening of Jupiter Street by 3.5 meters to improve traffic flow in said street to benefit both the residents of Bel-Air and the future owners of the commercial lots. 44
The petitioners cannot successfully rely on the alleged promise by Demetrio Copuyoc, Ayala's manager, to build a "[f]ence along Jupiter with gate for entrance and/or exit 45 as evidence of Ayala's alleged continuing obligation to maintain a wall between the residential and commercial sections. It should be observed that the fence referred to included a "gate for entrance and or exit" which would have defeated the purpose of a wall, in the sense the petitioners would put in one, that is to say, an impenetrable barrier. But as Ayala would point out subsequently, the proposed fence was not constructed because it had become unnecessary when the commercial lot owners commenced constructions thereon.
Be that as it may, the Court c
annot visualize any purported obligation by Ayala Corporation to keep the wall on the strength of this supposed promise alone. If truly Ayala promised anything assuming that Capuyoc was authorized to bind the corporation with a promise it would have been with respect to the fence. It would not have established the pre-existing obligation alleged with respect to the wall.
Obligations arise, among other things, from contract. 46 If Ayala, then, were bound by an obligation, it would have been pursuant to a contract. A contract, however, is characterized by a "meeting of minds between two persons . 47 As a consensual relation, it must be shown to exist as a fact, clearly and convincingly. But it cannot be inferred from a mishmash of circumstances alone disclosing some kind of an "understanding," when especially, those disparate circumstances are not themselves incompatible with contentions that no accord had existed or had been reached. 48
The petitioners cannot simply assume that the wall was there for the purpose with which they now give it, by the bare coincidence that it had divided the residential block from the commercial section of Bel-Air. The burden of proof rests with them to show that it had indeed been built precisely for that objective, a proof that must satisfy the requirements of our rules of evidence. It cannot be made to stand on the strength of plain inferences.
b.
This likewise answers the petitioners' second query, whether or not the Court of Appeals had "arbitrarily ignore(d) the decisive findings of the trial court." 49 i.e., findings pointing to alleged acts performed by the Ayala Corporation proving its commitment to maintain the wall abovesaid. Specifically, the petitioners refer to, among other things: (1) Ayala's alleged announcement to Bel- Air Village Association members that "[the perimeter wall along Jupiter Street will not be demolished," 50 (2) Ayala's alleged commitment "during the pendency of the case in the trial court" to restore the wall; (3) alleged assurances by Copuyoc that the wall will not be removed; (4) alleged contrivances by the corporation to make the association admit as members the commercial lot buyers which provided them equal access to Jupiter Street; and (5) Ayala's donation to the association of Jupiter Street for "private use" of Bel-Air residents. 51
682 (1903), where it was held that "whether the plaintiffs services were solicited or whether they were offered to the defendant for his assistance, inasmuch as these services were accepted and made use of by the latter, we must consider that there was a tacit and mutual consent as to the rendition of services." (At 686.) In that case, the defendant had enormously benefitted from the services that entitled the plaintiff to compensation on the theory that no one may unjustly enrich himself at the expense of another (Solutio indebiti) The facts of this case differ.
As we stated, the Ayala Corporation's alleged conduct prior to or during the proceedings below are not necessarily at war with claims that no commitment had been in fact made.
With respect to Ayala's alleged announcement before the association, the Court does not agree that Ayala had categorically assumed as an obligation to maintain the wall "perpetually," i.e., until the year 2007 (the expiration date under the "deed restrictions.") There is nothing in its statement that would bare any commitment. In connection with the conference between the parties "during the pendency" of the trial, it is to be noted that the Ayala Corporation denies having warranted the restoration of the said wall therein. What, on the other hand, appears in the records is the fact that Ayala did make that promise, but provided that the Mayor allowed it. It turned out, however, that the Mayor balked at the Idea. 52 But assuming that Ayala did promise to rebuild the wall (in that conference), it does not seem to us that it did consequently promise to maintain it in perpetuity.
It is unfair to say, as the trial court did, that the Ayala had "contrived to make future commercial lot owners special members of BAVA and thereby acquire equal right with the regular members thereof to use Jupiter Street 53 since, as we stated, the commercial lot buyers have the right, in any event, to make use of Jupiter Street, whether or not they are members of the association. It is not their memberships that give them the right to use it. They share that right with Bel-Air residents from the outset.
The objective of making the commercial lot owners special members of the Bel-Air Village Association was not to accord them equal access to Jupiter Street and inferentially, to give them the right to knock down the perimeter wall. It was, rather, to regulate the use of the street owing precisely to the "planned" nature of Ayala's development project, and real estate development in general, and this could best be done by placing the commercial lot owners under the association's jurisdiction.
Moreover, Ayala's overtures with the association concerning the membership of commercial lot buyers therein have been shown to be neither perfidious nor unethical nor devious (paraphrasing the lower court). We quote anew:
x x x x x x x x x
(7) On June 30, 1972, appellant informed BAVA that in a few months it shall subdivide and sell the commercial lots bordering the north side of Buendia Avenue Extension from Reposo Street up to Zodiac Street. Appellant also informed BAVA that it had taken all precautions and will impose upon the commercial lot owners deed restrictions which will harmonize and blend with the development and welfare of Bel-Air Village. Appellant further applied for special membership in BAVA of the commercial lot owners. A copy of the deed restrictions for the commercial lots was also enclosed. The proposed deed restrictions shall include the 19 meter set back of buildings from Jupiter Street, the requirement for parking space within the lot of one (1) parking slot for every seventy five (75) meters of office space in the building and the limitation of vehicular traffic along Buendia to entrance only, but allowing both vehicular entrance and vehicular exit through Jupiter Street and any side street.
In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant and informed the latter that the application for special membership of the commercial lot owners in BAVA would be submitted to BAVA's board of governors for decision.
(8) On September 25,1972, appellant notified BAVA that, after a careful study, it was finally decided that the height limitation of buildings on the commercial lots shall be increased from 12.5 meters to 15 meters. Appellant further informed BAVA that Jupiter Street shall be widened by 3.5 meters to improve traffic flow in said street. BAVA did not reply to said letter, but on January 22, 1973, BAVA wrote a letter to the appellant informing the latter that the Association had assessed the appellant, as special member of the association, the amount of P40,795.00 (based on 81,590 square meters at P.50 per square meter) representing the membership dues of the commercial lot owners for the year 1973, and requested the appellant to remit the amount which its board of governors had already included in its current budget. In reply, appellant on January 31, 1973 informed BAVA that due to the widening of Jupiter Street, the area of the lots which were accepted by the Association as members was reduced to 76,726 square meters. Thus, the corresponding due at P.50 per square meter should be reduced to P38,363.00. This amount, therefore, was remitted by the appellant to BAVA. Since then, the latter has been collecting membership dues from the owners of the commercial lots as special members of the Association. As a matter of fact, the dues were increased several times. In 1980, the commercial lot owners were already being charged dues at the rate of P3.00 per square meter. (Domingo, TSN, p. 36, March 19, 1980). At this rate, the total membership dues of the commercial lot owners amount to P230,178.00 annually based on the total area of 76,726 square meters of the commercial lots. 54
x x x x x x x x x
The alleged undertaking, finally, by Ayala in the deed of donation (over Jupiter Street) to leave Jupiter Street for the private use of Bel-Air residents is belied by the very provisions of the deed. We quote:
x x x x x x x x x
IV. That the offer made by the DONOR had been accepted by the DONEE subject to the condition that the property will be used as a street for the use of the members of the DONEE, their families, personnel, guests, domestic help a
nd, under certain reasonable conditions and restrictions, by the general public, and in the event that said lots or parts thereof cease to be used as such, ownership thereof shall automatically revert to the DONOR. The DONEE shall always have Reposo Street, Makati Avenue, and Paseo de Roxas open for the use of the general public. It is also understood that the DONOR shall continue the maintenance of the street at its expense for a period of three years from date hereof." (Deed of Donation, p. 6, Exh. 7) 55
x x x x x x x x x
The donation, on the contrary, gave the general public equal right to it.
The Court cannot then say, accepting the veracity of the petitioners' facts" enumerated above, that the Ayala Corporation may be held liable for specific performance of a demandable obligation, let alone damages.
The Court adds that Ayala can hardly be held responsible for the alleged deterioration of "living and environmental conditions" 56 of the Bel-Air area, as a consequence of "Ayala's authorized demolition of the Jupiter perimeter wall in 1974-1975. " 57 We agree with Ayala that until 1976, "there was peace and quiet" at Jupiter Street, as the petitioners' (Sangalang, Gaston, and Briones) complaints admit. Hence, the degeneration of peace and order in Bel-Air cannot be ascribed to the destruction of the wall in 1974 and 1975.
What Ayala submits as the real cause was the opening of Jupiter Street to vehicular traffic in 1977., 58 But this was upon orders of the Mayor, and for which the homeowners' association had precisely filed suit (Civil Case No. 34998) 59 to contest the act of the Mayor.
c.
This likewise disposes of the third question presented. The petitioners' reliance on Ayala's alleged conduct (proving its alleged commitment), so we have ruled, is not well-taken. Ayala's alleged acts do not, by themselves, reflect a commitment to maintain the wall in dispute. It cannot be therefore said that the Court of Appeals "arbitrarily ignore(d]" 60 the lower court's findings. Precisely, it is the duty of the appellate court to review the findings of the trial judge, be they of fact or law. 61 It is not bound by the conclusions of the judge, for which reason it makes its own findings and arrives at its own conclusions. Unless a grave abuse of discretion may be imputed to it, it may accept or reject the lower tribunal's determinations and rely solely on the records.
Accordingly, the Court affirms the Court of Appeals' holding that the Ayala Corporation, in its dealings with the petitioners, the Bel-Air Village Association in particular, had "acted with justice, gave the appellees [petitioners] their due and observed honesty and good faith." 62 "Therefore, under both Articles 19 and 21 of the Civil Code, the appellant [Ayala] cannot be held liable for damages." 63
2. G.R. Nos. 74376, 76394, 78182, & 82281
Our decision also resolves, quite anticlimactically, these companion cases. But we do so for various other reasons. In the Sangalang case, we absolve the Ayala Corporation primarily owing to our finding that it is not liable for the opening of Jupiter Street to the general public. Insofar as these petitions are concerned, we likewise exculpate the private respondents, not only because of the fact that Jupiter Street is not covered by the restrictive easements based on the "deed restrictions" but chiefly because the National Government itself, through the Metro Manila Commission (MMC), had reclassified Jupiter Street into high density commercial (C-3) zone, 64 pursuant to its Ordinance No. 81-01. Hence, the petitioners have no cause of action on the strength alone of the said "deed restrictions.
In view thereof, we find no need in resolving the questions raised as to procedure, since this disposition is sufficient to resolve these cases.
It is not that we are saying that restrictive easements, especially the easements herein in question, are invalid or ineffective. As far as the Bel-Air subdivision itself is concerned, certainly, they are valid and enforceable. But they are, like all contracts, subject to the overriding demands, needs, and interests of the greater number as the State may determine in the legitimate exercise of police power. Our jurisdiction guarantees sanctity of contract and is said to be the "law between the contracting parties, 65 but while it is so, it cannot contravene 'law, morals, good customs, public order, or public policy. 66 Above all, it cannot be raised as a deterrent to police power, designed precisely to promote health, safety, peace, and enhance the common good, at the expense of contractual rights, whenever necessary. In Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., 67 we are told:
x x x x x x x x x
2. With regard to the contention that said resolution cannot nullify the contractual obligations assumed by the defendant-appellee referring to the restrictions incorporated in the deeds of sale and later in the corresponding Transfer Certificates of Title issued to defendant-appellee it should be stressed, that while non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it has to be reconciled with the legitimate exercise of police power, i.e., "the power to prescribe regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people.' Invariably described as "the most essential, insistent, and illimitable of powers" and "in a sense, the greatest and most powerful attribute of government," the exercise of the power may be judicially inquired into and corrected only if it is capricious, whimsical, unjust or unreasonable, there having been a denial of due process or a violation of any other applicable constitutional guarantee. As this Court held through Justice Jose P. Bengson in Philippine Long Distance Company vs. City of Davao, et al. police power 'is elastic and must be responsive to various social conditions; it is not confined within narrow circumscriptions of precedents resting on past conditions; it must follow the legal progress of a democratic way of life.' We were even more emphatic in Vda. de Genuino vs. The Court of agrarian Relations, et al., when We declared: "We do not see why public welfare when clashing with the individual right to property should not be made to prevail through the state's exercise of its police power."
Resolution No. 27, 1960 declaring the western part of High way 54, now E. de los Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an industrial and commercial zone, was obviously passed by the Municipal Council of Mandaluyong, Rizal in the exercise of police power to safeguard or promote the health, safety, peace, good order and general welfare of the people in the locality. Judicial notice may be taken of the conditions prevailing in the area, especially where Lots Nos. 5 and 6 are located. The lots themselves not only front the highway; industrial and commercial complexes have flourished about the place. EDSA, a main traffic artery which runs through several cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the residents in its route. Having been expressly granted the power to adopt zoning and subdivision ordinances or regulations, the municipality of Mandaluyong, through its Municipal Council, was reasonably, if not perfectly, justified under the circumstances, in passing the subject resolution. 68
x x x x x x x x x
Undoubtedly, the MMC Ordinance represents a legitimate exercise of police power. The petitioners have not shown why we should hold otherwise other than for the supposed "non-impairment" guaranty of the Constitution, which, as we have declared, is secondary to the more compelling interests of general welfare. The Ordinance has not been shown to be capricious or arbitrary or unreasonable to warrant the reversal of the judgments so appealed. In that connection, we find no reversible error to have been committed by the Court of Appeals.
WHEREFORE, premises considered, these petitions are DENIED No pronouncement as to costs.
IT IS SO ORDERED.
Fernan, (C.J.), Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Bidin, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.
Narvasa, J., on leave.
Paras, J., Took no part;
Feliciano, J., Took no part;
Padilla, J., Took no part;
G.R. No. 74457 March 20, 1987
/>
RESTITUTO YNOT, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, THE STATION COMMANDER, INTEGRATED NATIONAL POLICE, BAROTAC NUEVO, ILOILO and THE REGIONAL DIRECTOR, BUREAU OF ANIMAL INDUSTRY, REGION IV, ILOILO CITY, respondents.
Ramon A. Gonzales for petitioner.
CRUZ, J.:
The essence of due process is distilled in the immortal cry of Themistocles to Alcibiades "Strike — but hear me first!" It is this cry that the petitioner in effect repeats here as he challenges the constitutionality of Executive Order No. 626-A.
The said executive order reads in full as follows:
WHEREAS, the President has given orders prohibiting the interprovincial movement of carabaos and the slaughtering of carabaos not complying with the requirements of Executive Order No. 626 particularly with respect to age;
WHEREAS, it has been observed that despite such orders the violators still manage to circumvent the prohibition against inter-provincial movement of carabaos by transporting carabeef instead; and
WHEREAS, in order to achieve the purposes and objectives of Executive Order No. 626 and the prohibition against interprovincial movement of carabaos, it is necessary to strengthen the said Executive Order and provide for the disposition of the carabaos and carabeef subject of the violation;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby promulgate the following:
SECTION 1. Executive Order No. 626 is hereby amended such that henceforth, no carabao regardless of age, sex, physical condition or purpose and no carabeef shall be transported from one province to another. The carabao or carabeef transported in violation of this Executive Order as amended shall be subject to confiscation and forfeiture by the government, to be distributed to charitable institutions and other similar institutions as the Chairman of the National Meat Inspection Commission may ay see fit, in the case of carabeef, and to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the case of carabaos.
SECTION 2. This Executive Order shall take effect immediately.
Done in the City of Manila, this 25th day of October, in the year of Our Lord, nineteen hundred and eighty.
(SGD.) FERDINAND E. MARCOS
President
Republic of the Philippines
The petitioner had transported six carabaos in a pump boat from Masbate to Iloilo on January 13, 1984, when they were confiscated by the police station commander of Barotac Nuevo, Iloilo, for violation of the above measure. 1 The petitioner sued for recovery, and the Regional Trial Court of Iloilo City issued a writ of replevin upon his filing of a supersedeas bond of P12,000.00. After considering the merits of the case, the court sustained the confiscation of the carabaos and, since they could no longer be produced, ordered the confiscation of the bond. The court also declined to rule on the constitutionality of the executive order, as raise by the petitioner, for lack of authority and also for its presumed validity. 2
The petitioner appealed the decision to the Intermediate Appellate Court,* 3 which upheld the trial court, ** and he has now come before us in this petition for review on certiorari.
The thrust of his petition is that the executive order is unconstitutional insofar as it authorizes outright confiscation of the carabao or carabeef being transported across provincial boundaries. His claim is that the penalty is invalid because it is imposed without according the owner a right to be heard before a competent and impartial court as guaranteed by due process. He complains that the measure should not have been presumed, and so sustained, as constitutional. There is also a challenge to the improper exercise of the legislative power by the former President under Amendment No. 6 of the 1973 Constitution. 4
While also involving the same executive order, the case of Pesigan v. Angeles 5 is not applicable here. The question raised there was the necessity of the previous publication of the measure in the Official Gazette before it could be considered enforceable. We imposed the requirement then on the basis of due process of law. In doing so, however, this Court did not, as contended by the Solicitor General, impliedly affirm the constitutionality of Executive Order No. 626-A. That is an entirely different matter.
This Court has declared that while lower courts should observe a becoming modesty in examining constitutional questions, they are nonetheless not prevented from resolving the same whenever warranted, subject only to review by the highest tribunal. 6 We have jurisdiction under the Constitution to "review, revise, reverse, modify or affirm on appeal or certiorari, as the law or rules of court may provide," final judgments and orders of lower courts in, among others, all cases involving the constitutionality of certain measures. 7 This simply means that the resolution of such cases may be made in the first instance by these lower courts.
And while it is true that laws are presumed to be constitutional, that presumption is not by any means conclusive and in fact may be rebutted. Indeed, if there be a clear showing of their invalidity, and of the need to declare them so, then "will be the time to make the hammer fall, and heavily," 8 to recall Justice Laurel's trenchant warning. Stated otherwise, courts should not follow the path of least resistance by simply presuming the constitutionality of a law when it is questioned. On the contrary, they should probe the issue more deeply, to relieve the abscess, paraphrasing another distinguished jurist, 9 and so heal the wound or excise the affliction.
Judicial power authorizes this; and when the exercise is demanded, there should be no shirking of the task for fear of retaliation, or loss of favor, or popular censure, or any other similar inhibition unworthy of the bench, especially this Court.
The challenged measure is denominated an executive order but it is really presidential decree, promulgating a new rule instead of merely implementing an existing law. It was issued by President Marcos not for the purpose of taking care that the laws were faithfully executed but in the exercise of his legislative authority under Amendment No. 6. It was provided thereunder that whenever in his judgment there existed a grave emergency or a threat or imminence thereof or whenever the legislature failed or was unable to act adequately on any matter that in his judgment required immediate action, he could, in order to meet the exigency, issue decrees, orders or letters of instruction that were to have the force and effect of law. As there is no showing of any exigency to justify the exercise of that extraordinary power then, the petitioner has reason, indeed, to question the validity of the executive order. Nevertheless, since the determination of the grounds was supposed to have been made by the President "in his judgment, " a phrase that will lead to protracted discussion not really necessary at this time, we reserve resolution of this matter until a more appropriate occasion. For the nonce, we confine ourselves to the more fundamental question of due process.
It is part of the art of constitution-making that the provisions of the charter be cast in precise and unmistakable language to avoid controversies that might arise on their correct interpretation. That is the Ideal. In the case of the due process clause, however, this rule was deliberately not followed and the wording was purposely kept ambiguous. In fact, a proposal to delineate it more clearly was submitted in the Constitutional Convention of 1934, but it was rejected by Delegate Jose P. Laurel, Chairman of the Committee on the Bill of Rights, who forcefully argued against it. He was sustained by the body. 10
The due process clause was kept intentionally vague so it would remain also conveniently resilient. This was felt necessary because due process is not, like some provisions of the fundamental law, an "iron rule" laying down an implacable and immutable command for all seasons and all persons. Flexibility must be the best virtue of the guaranty. The very elasticity of the due process clause was meant to make it adapt easily to every situation, enlarging or constricting its protection as the changing times and circumstances may require.
Aware of this, the courts have also hesitated to adopt their own spe
cific description of due process lest they confine themselves in a legal straitjacket that will deprive them of the elbow room they may need to vary the meaning of the clause whenever indicated. Instead, they have preferred to leave the import of the protection open-ended, as it were, to be "gradually ascertained by the process of inclusion and exclusion in the course of the decision of cases as they arise." 11 Thus, Justice Felix Frankfurter of the U.S. Supreme Court, for example, would go no farther than to define due process — and in so doing sums it all up — as nothing more and nothing less than "the embodiment of the sporting Idea of fair play." 12
When the barons of England extracted from their sovereign liege the reluctant promise that that Crown would thenceforth not proceed against the life liberty or property of any of its subjects except by the lawful judgment of his peers or the law of the land, they thereby won for themselves and their progeny that splendid guaranty of fairness that is now the hallmark of the free society. The solemn vow that King John made at Runnymede in 1215 has since then resounded through the ages, as a ringing reminder to all rulers, benevolent or base, that every person, when confronted by the stern visage of the law, is entitled to have his say in a fair and open hearing of his cause.
The closed mind has no place in the open society. It is part of the sporting Idea of fair play to hear "the other side" before an opinion is formed or a decision is made by those who sit in judgment. Obviously, one side is only one-half of the question; the other half must also be considered if an impartial verdict is to be reached based on an informed appreciation of the issues in contention. It is indispensable that the two sides complement each other, as unto the bow the arrow, in leading to the correct ruling after examination of the problem not from one or the other perspective only but in its totality. A judgment based on less that this full appraisal, on the pretext that a hearing is unnecessary or useless, is tainted with the vice of bias or intolerance or ignorance, or worst of all, in repressive regimes, the insolence of power.
The minimum requirements of due process are notice and hearing 13 which, generally speaking, may not be dispensed with because they are intended as a safeguard against official arbitrariness. It is a gratifying commentary on our judicial system that the jurisprudence of this country is rich with applications of this guaranty as proof of our fealty to the rule of law and the ancient rudiments of fair play. We have consistently declared that every person, faced by the awesome power of the State, is entitled to "the law of the land," which Daniel Webster described almost two hundred years ago in the famous Dartmouth College Case, 14 as "the law which hears before it condemns, which proceeds upon inquiry and renders judgment only after trial." It has to be so if the rights of every person are to be secured beyond the reach of officials who, out of mistaken zeal or plain arrogance, would degrade the due process clause into a worn and empty catchword.
This is not to say that notice and hearing are imperative in every case for, to be sure, there are a number of admitted exceptions. The conclusive presumption, for example, bars the admission of contrary evidence as long as such presumption is based on human experience or there is a rational connection between the fact proved and the fact ultimately presumed therefrom. 15 There are instances when the need for expeditions action will justify omission of these requisites, as in the summary abatement of a nuisance per se, like a mad dog on the loose, which may be killed on sight because of the immediate danger it poses to the safety and lives of the people. Pornographic materials, contaminated meat and narcotic drugs are inherently pernicious and may be summarily destroyed. The passport of a person sought for a criminal offense may be cancelled without hearing, to compel his return to the country he has fled. 16 Filthy restaurants may be summarily padlocked in the interest of the public health and bawdy houses to protect the public morals. 17 In such instances, previous judicial hearing may be omitted without violation of due process in view of the nature of the property involved or the urgency of the need to protect the general welfare from a clear and present danger.
The protection of the general welfare is the particular function of the police power which both restraints and is restrained by due process. The police power is simply defined as the power inherent in the State to regulate liberty and property for the promotion of the general welfare. 18 By reason of its function, it extends to all the great public needs and is described as the most pervasive, the least limitable and the most demanding of the three inherent powers of the State, far outpacing taxation and eminent domain. The individual, as a member of society, is hemmed in by the police power, which affects him even before he is born and follows him still after he is dead — from the womb to beyond the tomb — in practically everything he does or owns. Its reach is virtually limitless. It is a ubiquitous and often unwelcome intrusion. Even so, as long as the activity or the property has some relevance to the public welfare, its regulation under the police power is not only proper but necessary. And the justification is found in the venerable Latin maxims, Salus populi est suprema lex and Sic utere tuo ut alienum non laedas, which call for the subordination of individual interests to the benefit of the greater number.
It is this power that is now invoked by the government to justify Executive Order No. 626-A, amending the basic rule in Executive Order No. 626, prohibiting the slaughter of carabaos except under certain conditions. The original measure was issued for the reason, as expressed in one of its Whereases, that "present conditions demand that the carabaos and the buffaloes be conserved for the benefit of the small farmers who rely on them for energy needs." We affirm at the outset the need for such a measure. In the face of the worsening energy crisis and the increased dependence of our farms on these traditional beasts of burden, the government would have been remiss, indeed, if it had not taken steps to protect and preserve them.
A similar prohibition was challenged in United States v. Toribio, 19 where a law regulating the registration, branding and slaughter of large cattle was claimed to be a deprivation of property without due process of law. The defendant had been convicted thereunder for having slaughtered his own carabao without the required permit, and he appealed to the Supreme Court. The conviction was affirmed. The law was sustained as a valid police measure to prevent the indiscriminate killing of carabaos, which were then badly needed by farmers. An epidemic had stricken many of these animals and the reduction of their number had resulted in an acute decline in agricultural output, which in turn had caused an incipient famine. Furthermore, because of the scarcity of the animals and the consequent increase in their price, cattle-rustling had spread alarmingly, necessitating more effective measures for the registration and branding of these animals. The Court held that the questioned statute was a valid exercise of the police power and declared in part as follows:
To justify the State in thus interposing its authority in behalf of the public, it must appear, first, that the interests of the public generally, as distinguished from those of a particular class, require such interference; and second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals. ...
From what has been said, we think it is clear that the enactment of the provisions of the statute under consideration was required by "the interests of the public generally, as distinguished from those of a particular class" and that the prohibition of the slaughter of carabaos for human consumption, so long as these animals are fit for agricultural work or draft purposes was a "reasonably necessary" limitation on private ownership, to protect the community from the loss of the services of such animals by their slaughter by improvident owners, tempted either by greed of momentary gain, or by a desire to enjoy the luxury of animal food, even when by so doing the productive power of the community may be measurably and dangerously affected.
In the light of the tests mentioned above, we hold with the Toribio Case that the carabao, as the poor man's tractor, so to speak, has a direct relevance to the public welfare and so is a lawful subject of Exec
utive Order No. 626. The method chosen in the basic measure is also reasonably necessary for the purpose sought to be achieved and not unduly oppressive upon individuals, again following the above-cited doctrine. There is no doubt that by banning the slaughter of these animals except where they are at least seven years old if male and eleven years old if female upon issuance of the necessary permit, the executive order will be conserving those still fit for farm work or breeding and preventing their improvident depletion.
But while conceding that the amendatory measure has the same lawful subject as the original executive order, we cannot say with equal certainty that it complies with the second requirement, viz., that there be a lawful method. We note that to strengthen the original measure, Executive Order No. 626-A imposes an absolute ban not on the slaughter of the carabaos but on their movement, providing that "no carabao regardless of age, sex, physical condition or purpose (sic) and no carabeef shall be transported from one province to another." The object of the prohibition escapes us. The reasonable connection between the means employed and the purpose sought to be achieved by the questioned measure is missing
We do not see how the prohibition of the inter-provincial transport of carabaos can prevent their indiscriminate slaughter, considering that they can be killed anywhere, with no less difficulty in one province than in another. Obviously, retaining the carabaos in one province will not prevent their slaughter there, any more than moving them to another province will make it easier to kill them there. As for the carabeef, the prohibition is made to apply to it as otherwise, so says executive order, it could be easily circumvented by simply killing the animal. Perhaps so. However, if the movement of the live animals for the purpose of preventing their slaughter cannot be prohibited, it should follow that there is no reason either to prohibit their transfer as, not to be flippant dead meat.
Even if a reasonable relation between the means and the end were to be assumed, we would still have to reckon with the sanction that the measure applies for violation of the prohibition. The penalty is outright confiscation of the carabao or carabeef being transported, to be meted out by the executive authorities, usually the police only. In the Toribio Case, the statute was sustained because the penalty prescribed was fine and imprisonment, to be imposed by the court after trial and conviction of the accused. Under the challenged measure, significantly, no such trial is prescribed, and the property being transported is immediately impounded by the police and declared, by the measure itself, as forfeited to the government.
In the instant case, the carabaos were arbitrarily confiscated by the police station commander, were returned to the petitioner only after he had filed a complaint for recovery and given a supersedeas bond of P12,000.00, which was ordered confiscated upon his failure to produce the carabaos when ordered by the trial court. The executive order defined the prohibition, convicted the petitioner and immediately imposed punishment, which was carried out forthright. The measure struck at once and pounced upon the petitioner without giving him a chance to be heard, thus denying him the centuries-old guaranty of elementary fair play.
It has already been remarked that there are occasions when notice and hearing may be validly dispensed with notwithstanding the usual requirement for these minimum guarantees of due process. It is also conceded that summary action may be validly taken in administrative proceedings as procedural due process is not necessarily judicial only. 20 In the exceptional cases accepted, however. there is a justification for the omission of the right to a previous hearing, to wit, the immediacy of the problem sought to be corrected and the urgency of the need to correct it.
In the case before us, there was no such pressure of time or action calling for the petitioner's peremptory treatment. The properties involved were not even inimical per se as to require their instant destruction. There certainly was no reason why the offense prohibited by the executive order should not have been proved first in a court of justice, with the accused being accorded all the rights safeguarded to him under the Constitution. Considering that, as we held in Pesigan v. Angeles, 21 Executive Order No. 626-A is penal in nature, the violation thereof should have been pronounced not by the police only but by a court of justice, which alone would have had the authority to impose the prescribed penalty, and only after trial and conviction of the accused.
We also mark, on top of all this, the questionable manner of the disposition of the confiscated property as prescribed in the questioned executive order. It is there authorized that the seized property shall "be distributed to charitable institutions and other similar institutions as the Chairman of the National Meat Inspection Commission may see fit, in the case of carabeef, and to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the case of carabaos." (Emphasis supplied.) The phrase "may see fit" is an extremely generous and dangerous condition, if condition it is. It is laden with perilous opportunities for partiality and abuse, and even corruption. One searches in vain for the usual standard and the reasonable guidelines, or better still, the limitations that the said officers must observe when they make their distribution. There is none. Their options are apparently boundless. Who shall be the fortunate beneficiaries of their generosity and by what criteria shall they be chosen? Only the officers named can supply the answer, they and they alone may choose the grantee as they see fit, and in their own exclusive discretion. Definitely, there is here a "roving commission," a wide and sweeping authority that is not "canalized within banks that keep it from overflowing," in short, a clearly profligate and therefore invalid delegation of legislative powers.
To sum up then, we find that the challenged measure is an invalid exercise of the police power because the method employed to conserve the carabaos is not reasonably necessary to the purpose of the law and, worse, is unduly oppressive. Due process is violated because the owner of the property confiscated is denied the right to be heard in his defense and is immediately condemned and punished. The conferment on the administrative authorities of the power to adjudge the guilt of the supposed offender is a clear encroachment on judicial functions and militates against the doctrine of separation of powers. There is, finally, also an invalid delegation of legislative powers to the officers mentioned therein who are granted unlimited discretion in the distribution of the properties arbitrarily taken. For these reasons, we hereby declare Executive Order No. 626-A unconstitutional.
We agree with the respondent court, however, that the police station commander who confiscated the petitioner's carabaos is not liable in damages for enforcing the executive order in accordance with its mandate. The law was at that time presumptively valid, and it was his obligation, as a member of the police, to enforce it. It would have been impertinent of him, being a mere subordinate of the President, to declare the executive order unconstitutional and, on his own responsibility alone, refuse to execute it. Even the trial court, in fact, and the Court of Appeals itself did not feel they had the competence, for all their superior authority, to question the order we now annul.
The Court notes that if the petitioner had not seen fit to assert and protect his rights as he saw them, this case would never have reached us and the taking of his property under the challenged measure would have become a fait accompli despite its invalidity. We commend him for his spirit. Without the present challenge, the matter would have ended in that pump boat in Masbate and another violation of the Constitution, for all its obviousness, would have been perpetrated, allowed without protest, and soon forgotten in the limbo of relinquished rights.
The strength of democracy lies not in the rights it guarantees but in the courage of the people to invoke them whenever they are ignored or violated. Rights are but weapons on the wall if, like expensive tapestry, all they do is embellish and impress. Rights, as weapons, must be a promise of protection. They become truly meaningful, and fulfill the role assigned to them in the free society, if they are kept bright and sharp with use by those who are not afraid to assert them.
&nbs
p; WHEREFORE, Executive Order No. 626-A is hereby declared unconstitutional. Except as affirmed above, the decision of the Court of Appeals is reversed. The supersedeas bond is cancelled and the amount thereof is ordered restored to the petitioner. No costs.
SO ORDERED.
Teehankee, C.J., Yap, Fernan, Narvasa, Gutierrez, Jr., Paras, Gancayco, Padilla Bidin Sarmiento and Cortes, JJ., concur.
Melencio-Herrera and Feliciano, JJ., are on leave.
EMINENT DOMAIN
G.R. No. L-24740 July 30, 1979
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,
vs.
CELESTINO C. JUAN and ANA TANSECO JUAN, defendants-appellants.
Celestino C. Juan &, Associates for appellants.
Solicitor General's Office for the appellee.
MAKASIAR, J.:1äwphï1.ñët
Appeal by defendants-appellants from the decision dated September 28, 1964 of the Court of First Instance of La Union in Civil Case No. 1835 for the expropriation of 338.7480 hectares of land owned by spouses Celestino C. Juan and Ana Tanseco as the site for the La Union Regional Agricultural School, directing the plaintiff Republic of the Philippines totêñ.£îhqwâ£
... pay the legal owners Celestino C. Juan and Ana Tanseco the amount of P190,000.00 which is the just and reasonable compensation that the Court rules in this case in favor of the defendants; and it appearing that on May 7, 1963, P100,000.00 had already been paid, it is therefore ordered that upon this decision becoming final the balance of P90,000.00 plus interest of 6% from May 4, 1963 shall be paid to defendants Celestino C. Juan and Ana Tanseco," aside from the costs of the suit.
Defendants-appellants are the registered owners of two (2) adjoining parcels of land located at Barrio Sapilang, Bacnotan, La Union with an aggregate area of 3,387,480 square meters or 338.7480 hectares, more or less, and covered by Original Certificate of Title No. 0-420 issued on April 14, 1959 (pp, 9-14, 46-47, ROA; Vol. 1, rec.).
Pursuant to the authorization issued on March 15, 1963 by the President of the Philippines through the Executive Secretary (p 15, ROA), the Solicitor General filed on April 8, 1963 the complaint for expropriation of the aforesaid parcels of land to be used as the site of the La Union Agricultural School, which was to be established by authority of Republic Act 2692 (pp. 9-20, 43 ROA, Vol. I, rec.).
Before the institution of the expropriation proceedings Victor Luis, who was appointed principal of the proposed school, recommended the property of defendants as the school site. Thereafter, together with Mrs. Avelina L. Osias, he negotiated with the defendants for the purchase of their property (pp. 85-87, ROA, Vol. 1, rec.). On January 25, 1963, he wrote a letter to defendant Celestino Juan, thus:têñ.£îhqwâ£
... Feelers have come to you to inquire about the price that you would be willing to sell your land. Mrs, Pacita Gonzales and the undersigned came to you personally and you informed us verbally your least price of P170,000.00 which you explained to us is very reasonable.
May I request your kindness to confirm the above price in writing, as your offer as the selling price of your above-mentioned land in order that there will be an official record or basis in negotiating with authorities concerned in the purchase of your land as school site. (pp. 43-44, ROA, Vol. I, rec.).
Defendant Celestino Juan replied on January 28, 1963.têñ.£îhqwâ£
... that the selling price of my land is P170,000.00 net to me exclusive of the amount of my obligation to the China Banking Corporation where the property is mortgaged.
The condition of the sale is at least P90,000.00 down and the balance within a period of one (1) year. Title to the property will be transferred to you immediately provided that an annotation of the remaining balance of the price be accordingly made in the new title.
I wish, however, to tell you that presently there are no less than 23 tenants in the land and they are harvesting or about to harvest their tobacco crops. In justice to them, they should be allowed to finish harvesting their crops before they are finally ejected.
It is with deep regret that I cannot part with the land at a lesser price. There are 3 parties at least aside from you who are interested to buy the land. One of them is ready to sign the contract for a price of P200,000.00 payable in cash or at least a period of ten (10) days. This party, through an understanding with a certain bank can mortgage the property for P350,000.00. As you see, if the primary consideration is money alone, then, if I am a smart, I should mortgage the land myself. It should be noted, and I have all the records with me, that I have applied for a loan with the Development Bank of the Philippines in the amount of P4,102,000.00 principally to establish a dairy farm and mortgaging only as collateral the said land. From the conversation with said bank, it seems to me that the same would be favorably considered if not for P4,000,000.00 at least P1,000,000.00.
Kindly confirm your acceptance of the terms of this letter as I can hold the land for a period of ten (10) days. (pp. 382-384, ROA).
After receipt of the aforequoted letter, Mr. Luis consulted his office in Manila (p. 86, ROA, Vol. I, rec.) as well as the provincial officials of La Union and the municipal officials of Bacnotan (pp. 86,174, ROA, Vol. I, rec.).
In an order dated April 15, 1963, the trial court authorized the Government to enter and take immediate possession of the property after depositing the amount of P90,793.70 with the provincial treasurer of La Union as provisional value (p. 20, ROA, Vol. I, rec.),
Defendants on April 24, 1963 filed their "Urgent Motion for Reconsideration and/or to Lift Writ of Possession" questioning among others, the propriety and correctness of Resolution No. 13, series of 1962, of the Provincial Appraisal Committee and pointing out that "the fair and reasonable market value ... should be at least fifty centavos (P0.50) per square meter of P5,000.00 per hectare" and prayed that the complaint for expropriation be dismissed for lack of jurisdiction; to set aside the order dated April 15, 1963 and instead order plaintiff to deposit the amount of P300,000.00 as provisional value; and to set aside the writ of possession dated April 16, 1963 until the court has decided the issue of jurisdiction and/or until plaintiff has deposited the amount of P300,000.00 as provisional value of the property (pp. 22-32, ROA, Vol. I, rec.). On the same date, the lower court lifted the writ of possession until further orders.
Acting on the aforesaid motion on April 26, 1963, the lower court found the expropriation proceedings in order and the provisional value made by the Provincial Appraisal Committee inadequate and ordered the plaintiff Republic of the Philippines to deposit the amount of P100,000.00 as provisional value until the true valuation of the lots can be determined in accordance with law and further directed "that for the best interest of the defendants whose improvements may be vandalized for lack of protection, let the writ be effected without prejudice to the final determination of the true value of the property to be determined in due course" and forthwith ordered the issuance of the writ of possession after the deposit by plaintiff of the amount of P100,000.00 is made (p. 45, ROA, Vol. I, rec.).
On May 4, 1963, plaintiff Republic of the Philippines took possession and occupied the lots under expropriation (p. 86, ROA, Vol. I, rec.) and deposited on May 7, 1963 the amount of P100,000.00 which the appellants withdrew that same day.
On May 7, 1963, defendants filed two simultaneous pleadings: motion for reconsideration of the provisional value on the ground that the value fixed by the court is still inadequate; and a motion to dismiss which likewise embodied defendants' answer to the complaint for expropriation (pp. 46-66, ROA, Vol. I, rec.).
In an order dated June 13, 1963, the court denied the motion to dismiss of defendants for lack of merit (p. 66, ROA, Vol. I, rec.).
In order dated January 8, 1964, the trial court directed the condemnation of the property,têñ.£îhqwâ£
it appearing that the plaintiff has already deposited the amount of P100,000.00 the provisional value of the property sought to be condemned, which amount has already been withdrawn
by the defendants and the property accordingly turned over to the Republic of the Philippines for the use of the La Union Agricultural School, ..." (pp. 66-67, ROA, emphasis supplied).
and appointed as commissioners of appraisal (1) Atty. Rogelio Balagot, for the lower court and as chairman; (2) Atty. Eufemio Molina, for the plaintiff; and (3) Atty. Pablito M. Rojas, for the defendants (pp. 4, 67-68, ROA, Vol. I, rec.).
For a period of three days, these commissioners in the presence of the parties, conducted an extensive ocular inspection and physical investigation of the property, after which they held protracted hearings until June 2, 1964, wherein both parties were given full opportunity to present their respective positions with voluminous documentary and oral evidence (p. 4, ROA, Vol. I, rec.).
On June 29, 1964, Atty. Eufemio Molina, commissioner for plaintiff, filed his report dated June 25, 1964 (pp. 69-78, ROA, Vol. I, rec.) recommendingtêñ.£îhqwâ£
... that the value of the land of defendants to be taken as the site of the La Union Agricultural School at Sapilang, Bacnotan, La Union, be fixed at P135,000.00. which amount is the meeting point between the government's offer of P100,000.00 and the defendants' price of P170,000.00.
Atty. Pablito M. Rojas, commissioner for the defendants, in his report of July 13, 1964, recommendedtêñ.£îhqwâ£
... as the price of the land to be paid by the plaintiff to the defendants the amount of P1,407,856.00 the same to bear interest at the legal rate from the date of possession by the plaintiff to the date the amount is actually paid.
Commissioner Rogelio F. Balagot for the court and chairman recommended:têñ.£îhqwâ£
... that the just compensation to be paid the defendants landowners be the following:
Value of the Land......................................................................... P1,044,163.70
Value of Improvements.................................................................. 1,712.60
Total Amount................................................................ P1,045,876.30
That the balance of P945,876.30 (deducting P100,000.00, the amount paid as provisional value) earn legal interest (6%) until fully paid.
Defendants-appellants filed their objection to the reports of Commissioners Rojas, Balagot and Molina, claiming that the true value of the land is P1,736,208.32 or P1,693,740.00 (pp. 284, 374, ROA, Vol. 1. rec.).
On September 4, 1964, defendants filed a petition entitled "Petition to Submit Case for Decision" without any hearing on the reports (p. 378, ROA, Vol, I, rec.)
On September 28, 1964, the lower court rendered its decision (pp. 380- 426, ROA, Vol. I, rec.).
A motion for reconsideration was filed by defendants on October 26, 1964 (pp. 426-508, ROA. Vol. I, rec.), but the same was denied by the Court in an order dated May 10, 1965 (pp. 509-514, ROA. Vol. I, rec.).
I
Under their first assignment of error, appellants contend that the propriety of the expropriation and the manner in which it was conducted were in dispute throughout the proceedings in the trial court and that they never waived their objections thereto; that the conditions precedent as provided for by Executive Order No. 132, series of 1937, as amended, were not complied with, for no proper and valid negotiation to purchase the lots or to have it donated to the Government was undertaken by the State before the institution of the expropriation case in court; and that the resolution of the Appraisal Committee which was the basis of the amount alleged in the complaint as the fair market value of the lots to be expropriated was null and void, having been adopted contrary to legal requirements (pp. 24-46, Appellants' Brief: p. 11. Vol. II. rec.). The same points were raised by the appellants in their motion for reconsideration of the lower court's main decision and the trial court in its order of May 10, 1965 correctly overruled them, stating that:têñ.£îhqwâ£
Movants start by bringing to the front the alleged lack of negotiations between plaintiff and defendants for the acquisition of the 338 hectares belonging to the latter. Non-compliance with Executive Order No. 132 is mentioned repeatedly by the defendants as vitiating this case. It is even hinted that the best resolution for this case would be to dismiss it because plaintiff failed to comply with said Executive Order dictated in pre-war days. Plaintiff delivered to defendants through this Court P100,000.00 as part of the fair and just compensation that the defendants are entitled. On May 7, 1963, such amount was received by defendants and plaintiff started developing the area and constructing the buildings needed for the La Union Agricultural School. This school is now in operation; and it would certainly be the most disturbing step for the regularity of the functions of the Government to dismiss the case, compelling the plaintiff to remove all buildings in the land that once belonged to the defendants and return the property to them. Besides, interpreting with fair liberality the pre-war Executive Order No. 132, the court shall now state that for the purpose of negotiations with the land owners the letter of January 5, 1963 received by the defendants and the latter's reply of January 28, 1963 are clear and sufficient compliance with the tenor and spirit of said Executive Order. The court, therefore, rejects any request that this case having been filed without sufficient compliance with said administrative procedures the whole proceeding shall have to be dismissed. This cannot be done." (pp. 511-512, ROA, Vol. I, rec.).
To begin with, it must be emphasized that plaintiff-appellee in this instant case is the Republic of the Philippines which is exercising its right of eminent domain inherent in it as a body sovereign. In the exercise of his sovereign right the state is not subject to any limitation other than those imposed by the Constitution which are: first, the taking must be for a public use; secondly, the payment of just compensation must be made; and thirdly, due process must be observed in the taking. Beyond these conditions, the exercise by the State of its right of eminent domain is subject to no restraint. Section 64(h) of the Revised Administrative Code confers upon the Chief Executive the power to determine when it is necessary or advantageous to exercise the power of eminent domain in behalf of the Republic of the Philippines and to direct the Solicitor General to cause the filing of the appropriate condemnation proceedings in court. By this grant, the executive authorities may then decide whether the power will be invoked and to what extent (see pp. 87-89, Political Law of the Philippines, Tañ;ada and Carreon, 1962 ed., citing Visayan Refining Co. v. Camus, 40 Phil. 550).
Appellants in making their first assignment of error are under the wrong impression that the provisions of Executive Order No. 132 are conditions precedent to the valid exercise of the State of its right of eminent domain. As a whole, Executive Order No. 132 is purely an administrative procedure confined within the executive department of the government designed merely to govern and regulate the taking of private properties for public use which may either be by voluntary sale or by donation in favor of the government. Nothing is provided in said executive order expressly or impliedly making the procedures therein enumerated as conditions precedent to the valid exercise by the government of the right of eminent domain by filing the proper action in court. As stated, Executive Order No. 132 was intended merely to govern the taking of private property short of judicial action either by purchase or donation. Being so, the same cannot limit or circumscribe the sovereign and inherent right of the State to expropriate private property through the Courts.
Moreover, there has been substantial compliance with the requirements of Executive Order No. 132; because negotiations for the purchase of the parcels were conducted between Victor Luis, the principal of the proposed agricultural school, and Mrs. Avelina L. Osias on one hand, and the defendants-appellants on the other, which did not result in a voluntary sale by the defendants-appellants for lack of agreement on the just compensation for the parcels.
Paragraph (a) of Executive Order No. 132 provides that negotiations shall be conducted by the "Director of Public works, city or district engineer, or other officials concerned ... The last term can comprehend the principal o
f the proposed agricultural institution.
Furthermore, the unqualified withdrawal by appellant of the amount of P100,000.00 deposited in court by the plaintiff as provisional value of the lots subject of expropriation, constituted recognition on their part of the right of the government to expropriate the lots, (Republic v. Pasicolan, May 31, 1961, 2 SCRA 626).
If the unconditional withdrawal of the amount deposited as provisional value precludes the defendants-appellants from questioning the right of the plaintiff to expropriate, it must necessarily follow that said withdrawal also estops defendants-appellants from raising any objection to the manner and propriety of the exercise by the plaintiff of the right of expropriation (18 American Jurisprudence 634-635, Francisco's The Revised Rules of Court in the Philippines, Vol. IV-B, pp. 411-412).
There can be no debate that due process was observed in the instant case. Likewise, education is public use or public purpose. Republic Act No. 2692 expressly authorizes the establishment of the La Union Regional Agricultural School within the Province of La Union and the acquisition of a suitable site therefor. The inadvertent omission of the term Regional in the complaint for expropriation could not nullify the expropriation of the lands of defendants-appellants. Such error in the complaint does not amend the law and can easily be corrected without affecting the validity of the proceedings.
II
The valuation of the lots must be fair and just, not only to the owner but also to the taxpayers who are to pay for it. Appellants are entitled to receive only the value of what they have been deprived of, and no more; because to award them less, would be unjust to them, and to award them more, would be unjust to the public (27 Am. Jur., 2nd s 266, footnote 17 pp. 52- 53).
The three commissioners appointed by the trial court to determine the fair market value of the lots did not reach a consensus as to the classification of the land, the allocation of areas as to each class, and the fair market value of each class of land.
Commissioner Rogelio F. Balagot found and recommended as follows:
1. Irrigated Riceland
70
P8,500.00
P595,000.00
2. Upland Rice
66
3,500.00
231,000.00
3. Orchard Land
52.0785
1,200.00
50,494.20
4. Pasture Land
90.6695
1,000.00
90,669.50
5. Forestland
70
1,000.00
77,000.00
TOTAL
338.7480 has.
1,044,163.70
and, after adding to the above amount the sum of P1,712.00, representing improvements, finally recommended the amount of P1,045,876.30 less P100,000.00 earlier withdrawn by appellants, to earn legal interest until fully paid (pp. 271-282, ROA, Vol. I, rec.) Commissioner Pablito M. Rojas appraised the land as follows:
Commissioner Pablito M. Rojas appraised the land as follows:
Land Classification
Total
Market
Total
Hectares
Value sq. meter
Market Value
Irrigated Palay Land
65.0000
P1.00
P650,000.00
Upland Palay
66.0000
0.30
198,000.00
Orchard
38.0785
25
98,200.00
Pasture Land
95.6695
10
92,669.50
Forestry Compound
8.0000
30
95,000.00
Forest Land
65.0000
15
97,500.00
Barrio Compound
4.0000
.50
20,000.00
TOTAL
338.7480
1,171,369.50
and after considering some factors, like the fact that the lots are titled, said commissioner finally recommended "the amount of P1,407,856.00, the same to bear interest at the legal rate from the date of possession by the plaintiff to the date the amount is actually paid" (pp. 160-166, ROA, Vol. I, rec.).
Commissioner Eufemio Molina adopted the following classification and allocation:têñ.£îhqwâ£
(a) With respect to Lot No. 1 (Exh. "B"), into —têñ.£îhqwâ£
1. Unirrigated riceland with an area of 120,000 sq. meters.
2. Upland rice with an area of 85,000 sq. meters.
3. Pasture land with area of 2,801,695 sq. meters.
(b) With respect to Lot No. 2 (Exh. 'B-l') , into-têñ.£îhqwâ£
1. Unirrigated riceland with an area of 120,000 sq. meters,
2. Upland rice with an area of 85,000 sq. meters.
3. Pasture land with an area of 175,785 sq. meters.
and making a mass valuation of the entire two lots, recommended the amount of P135,000.00 by taking into consideration the amount which to him is the price the government is willing to pay: P100,000.00 (actually the provisional value deposited by the government to take possession of the lots); P170,000.00 which according to him is the amount for which the defendants are willing to part with their lots (actually P190,000.00 including the bank mortgage liability of the land) and also the fact that the lots in question were acquired by tile defendants in 1957 for the amount of only P50,000.00 fro 'm Felipe Nebrija and his children (pp, 71- 78, ROA, Vol. 1, rec.).
Before the filing of the complaint, a Provincial Appraisal Committee composed of Provincial Assessor Ramon Zandueta as chairman, and as members, Provincial Highway District Engineer( Oscar Data and Provincial Auditor Gabino Ferrer, was constituted. On November 16, 1962, this committee conducted an ocular inspection of the property, and on the same day, submitted its Resolution No. 13, Exhibit A, which classified defendant's property as follows:têñ.£îhqwâ£
60 hectares riceland at P800.00 per hectare .I................. P48,000.00
278.7480 hectares pasture land at P150.00 per hectare ...41,812.20têñ.£îhqwâ£
TOTAL................................................................ 189,812.20
(p. 135, ROA, Vol. I. rec.). The aforesaid resolution was rejected as having been done in haste (pp. 135-136, ROA, Vol. I, rec.).
According to Provincial Assessor Zandueta, the amount of P89,812.20 is the assessed value of the property, which assessed value is the appraised value in expropriation cases (p. 141, ROA, Vol. I, rec.).
La Union Agriculturist Pio A. Tadina was requested by Provincial Assessor Ramon Zandueta to appraise the property. Pursuant to said request, Mr. Tadina went to the property thrice and thereafter submitted his classification and valuation, as follows:
1. 40 hectares riceland
P60,000.00
P200,000.00
2. 20 hectares riceland
20,000.00
60,000.00
3. 80 hectares pasture land
40,000.00
80,000.00
4. 120 hectares fruit trees
60,000.00
120,000.00
5. 72 hectares 2nd growth forest
78,000.00
156,000.00
TOTAL
P258,000.00
P616,000.00
(p. 145, ROA, Vol. I, rec.).
When the complaint was filed, the improvements on the property consisted of the following:
20 mango (bearing) P30 ea.
P800.00
21 coconut (bearing) P5 ea.
105.00
4 coconut (non-bearing) P2 ea.
8.00
4 caimito (star apple) P8 ea.
32.00
2 Chesa P5 ea.
10.00
4 Kasuy P2 ea.
8.00
12 bamboos (heavy) P0.30 ea.
3.60
1 b
amboo (light) P0.10 ea.
0.10
1 breadfruit P5 ea.
5.00
1 jackfruit P4 ea.
4.00
1 guayabano P1 ea.
1.00
6 orange (non-bearing) P1 ea.
6.00
TOTAL
P982.70
(pp. 16-17, ROA, Vol. I, rec.).
Mr. Luis Victor, principal of the La Union Regional Agricultural School, testified that there were around 30 fruit-bearing mango trees, once coconut fruit-bearing trees and banana plants (p. 139, ROA, Vol. I, rec.).
Both Attys. Pablito M. Rojas and Rogelio Balagot, commissioners representing respectively the defendants-appellants and the trial court, agreed that the value of the improvements on the property was then P1,712.60 (pp. 163, 280-281, ROA, Vol. I, rec.).têñ.£îhqwâ£
... Starting from the town proper of Bacnotan, one can reach the property by passing through the barrios of Cabaroan, Sayoan, Salincob, Casiaman and finally Sapilang. The place is about 2.5 kilometers north of the Poblacion along the National Highway up to the so-called Cabaroan junction. From this junction is about a 2-kilometer feeder road going eastward. And from this lateral road is an unsurfaced road of approximately 1.5 kilometers leading to the site of the Agricutural School. However, before the school took possession of the land on May 4, 1963, the place was not accessible at all by any motor vehicles, and that the only means was to hike over rice paddies, trails and creeks.
Topographically, the property of defendant is situated on a high elevation. It consists of mountains and hills forming a semi-circle, and sloping on the sides towards an elongated portion or valley like depression which is level and developed into ridefields. Because of its high elevation or location, the climate of the place is healthful, temperate and especially invigorating when one is near or within the vicinity of the waterfall or spring. The climate is of the kind which the Weather Bureau would call the Type I climate; that is, the place has two distinct seasons, a dry season from December to June, when there are light rains or no rains at all and wet season, from June to December, when rains are abundant, heavy and frequent. The soil to the place is good. It has a luxurient vegetation.
The property as per Original Certificate of Title No. 0-420 (Exh. '9-f') is divided into 2 lots; Lot No. 1 has an area of 3,006,695 square meters and covered by Tax Declaration No. 33043 (Exh. 'b'); and Lot No. 2 which is under Tax Declaration No. 33043 (Exh. 'B-l') has an area of 380,785 square meters, making a total land area of 338,7480 hectares, with an assessed value of P42,120.00.
Aside from the waterfall or spring within the property, there are also fruit trees, scattered bamboo groves, banana trees in patches, forest area, upland and pasture land. The bamboo and banana lands, however, cannot properly be considered as such because the land upon which they grow is not planted principally for such growth. The improvements on the forestry area have been introduced by the government, notably the Reforestation Administration of the Department of Agriculture and Natural Resources. (Exh "D" and Exh. "I"). The other improvements on the land have been itemized in the complaint filed before the Court. (pp. 69-71, ROA, Vol. I, rec.).
The foregoing findings do not appear to be disputed.
Defendant-appellant Celestino Juan himself, stated in his letter of January 28, 1963 that his property is worth P190,000.00 (including his bank loan), which he later increased to P300,000.00 in his motion for reconsideration filed on April 24, 1963. It should be recalled that over three months earlier, appellant Celestino Juan, in his letter dated January 2, 1963 to the Provincial Appraisal Committee, evaluated his property at approximately P329,374.00, stating that he spent P15,000.00 for survey P5,000.00 for registration and P20,000.00 for bulldozing and levelling; that 60 hectares are first class which should be worth P3,000.00 per hectare; and that the remaining portion of 278.748 hectares should command at least P500.00 per hectare (pp. 35-37, ROA, Vol. I. rec.).
The last evaluation in the amount of P300,000.00 judicially given by the defendants-appellants is a declaration and admission binding on them (Sec. 22, Rule 130, Revised Rules of Court), there being no showing that they were laboring under an error of fact. No compelling reason has been advanced to justify their being relieved from the binding effects of such admission. As We ruled in the Republic of the Philippines versus Narciso [99 Phil. 1031 (1956)], "the owners' valuation of the property may not be binding on the Government or the Court, but it should at least set a ceiling price for the compensation to be awarded. Moreover, the prices to be considered are those at the beginning of the expropriation, not the increased values brought about by the improvements and actuations of the Government after occupying the premises" (Re-affirmed in R.P. v. PNB, April 12,1961, 1 SCRA 957-963).
When the defendants-appellants withdrew in 1963 the P100,000.00 deposited by the government, they already obtained a clear profit of P10,000.00 on their alleged investment of P90,000.00 consisting of P50,000.00, the price they allegedly paid for the property in 1957, and P40,000.00 allegedly representing expenses for levelling, surveying and securing their Torrens title of the property from 1957 to 1959. The balance of P392,000.00 — consisting of P200,000.00 and interest of P192,000.00 at 6% annually for 16 years from May 4, 1963 to 1979 — is all profit, even during times of inflation. From 1957 until May 4, 1963, when the government took possession of the property, the defendants-appellants paid realty taxes on the basis of their tax assessment of only P42,120.00 (P89,812.20 according to Provincial Assessor Zandueta [p. 141, ROA, Vol. I, rec.]). Atty. Pablito M. Roxas and Atty. Rogelio Balago, appraisal commissioners respectively for appellants and the trial court, conceded that the value of the improvements was only P1,712.00 in 1963. To give them more than a million pesos — about P1,111,360.00 — on the basis of the appraisal of P616,000.00 by provincial agriculturist Pio Tadina, including interest for 16 years at 6% per annum, would be to mulct the tax-paying public, as the said amount is over ten times or over 1000% on their alleged original investment of P90,000.00 from 1957, to 1959. Precisely, in their reply dated January 28, 1963, their selling price was only P170,000.00 net to them, exclusive of their bank debt of P20,000.00.
The appraisal of Provincial Agriculturist Pio Tadina, Chief Agricultural Appraiser Rafael T. David of the DBP, Commissioner Balagot and Commissioner Rojas, respectively, in the amount of P616,000.000, P1,006,400.00, P1,044,163.70, and P1,171,369.50, is patently extravagant, considering that the property was bough in 1957 (1956 as claimed by appellants [pp. 112, 126, Appellants' Brie])) for P50,000.00 only and the value of the improvements did not exceed P1,712.60 as of May 4, 1963, when the government took possession. It is doubtful that the property would increase in value over 6 times or over 10 times or by over 600% or over 1,000% in six years, from 1957 to 1963, with the expenses for surviving, securing the Torrens title over and bulldozing said property amounting to not more than P40,000.00, already included in the computation (p. 36, ROA, Vol.. I, rec.).
It should be emphasized that the property is about 6 kilometers from the poblaciosion of Bacnotan; that on May 4, 1963, when the government took possession of the same, it was not accessible at all by any motor vehicle and can only be reached by hiking through rice paddies, trails; and creeks; that it was not fully developed: and that it was then assessed at P42,120.00 (P89,812.20 according to Provincial Assessor Zandueta), although it has a waterfall or- spring,
According to Commissioner Molina, the property has 24 hectares of Unirrigated rice land and 17 hectares dedicated to upland rice with the greater portion of 297.748 hectares as pasture land (pp, 71-72, ROA, Vol. I, rec.). Pio Tadina reported that 60 hectares are riceland, 80 hectares pasture land 120 hectares with fruit trees and 78 hectares second growth forest (p. 146, ROA, Vol. I. rec.). According to Rafael 'I. David,, who was requested by appellant Juan to make an appraisal (p. 145, ROA, Vol. I. rec.), 70 hectares are riceland, 66 hectares for upland rice, 38.0785 hectares for orchard, 90.6695 hectares pasture land, 5 hectares forestry compound, 65 hectares
forest land and 4 hectares barrio compound (p. 150, ROA, Vol. I, rec.).
Even under the classification of Commissioners Balagot and Rojas, as aforestated, about 50% of the property is not improved by man nor dedicated to agriculture, for about 95 hectares are pasture land and 70 hectares are forest land.
The sales of farm lots in the vicinity of the property in question from April, 1959 to May 14, 1962 (pp. 74-75, 152-153, 156-157, ROA, Vol. I, rec.), do not provide an adequate basis for appraisal of the property of defendants-appellants; because such sales involved very small developed areas of less than a hectare each, which small lots usually command better prices within the reach f the ordinary buyer. The instant case involves the condemnation of over 338 hectares.
III
It is argued that appellants judicial admission of P300,000.00 as the provisional value of their lots, should not bind them, because said admission refers only to the provisional value of the said lots and not as an admission of the actual - fair and just - value of the lots. The provisional value fixed by the Court pursuant to Section 2 of Rule 67 of the Rules of Court, is the provisional value that does not bind the land-owners. But when the landowner himself fixes the provisional value, he should abide thereby in obedience to the rule that admissions in pleadings bind the party making them.
Section 2 of Rule 67, New Rules of Court reads:têñ.£îhqwâ£
Entry of plaintiff upon depositing value with the National or Provincial Treasurer — Upon the filing of the complaint or at any time thereafter the plaintiff shall have the right to take or enter upon the possession of the real or personal property involved if he deposits with the National or Provincial Treasurer its value, as provisionality and promptly ascertained and fixed by the Court having jurisdiction of the proceedings, to be held by such treasurer subject to the orders and final disposition o)f the court...
Rule 69, Section 3 of the Old Rules of Court under which the present case was filed contained a similar provision. (See also Visayan Refining Co. v. Camus. 40 Phil. 550-556 [1919] and Manila Railroad Co. v. Paredes (31 Phil. 118-142 [1915]).
For emphasis, We repeat that the price of P300,000.00 was the provisional value fixed not by the trial court, but by the defendants-appellants as owners in their motion for reconsideration filed on April 24, 1963. The provisional value fixed by the trial court in its order of April 15, 1963, was only P90,793.70, the reconsideration of which the owners sought from the trial court. In its order of April 26, 1963, the trial court fixed the provisional value of P100,000.00. The trial court, in its challenged decision of September 28, 1964, finally fixed the value at P190,000.00, which is still more than double the alleged capital investment of P90,000.00 allegedly paid by the owners for the purchase of the property, levelling and expenses for survey and titling of the property from 1957 to 1959. In his own letter of January 28, 1963, where he fixed his selling price at P170,000.00 net to him (plus P20,000.00 bank mortgage on the property), defendant-appellant Celestino, Juan stated that the best offer he had for the property was only P200,000.00.
While it may be true that the value provisionally fixed by the trial court "... does not necessarily represent the true and correct value of the land ..." it is equally true that the said amount provisionally fixed may yet turn out to be the true and correct value of the lots approximating the "just compensation" requirement of the Constitution. In fact, the same may also turn out to be more than the true and correct value of the property condemned by the government (see 27 AM JUR 2nd 111, footnote 16).
Furthermore, it can be justifiably inferred that when appellants themselves proposed on April 24, 1963 the amount of P300,000.00 as the provisional value of their lots, they were referring actually to the highest value their lots could command at that time, notwithstanding their very speculative and extravagant claim in the same pleading (where they made the P300,000.00 proposal) that the "fair market value of (the) property should at least be fifty centavos . . per square meter or P5,000.00 per hectare.
Consider the following circumstances: têñ.£îhqwâ£
1. In his reply dated January 28,1963 to the letter of Mr. Victor Luis, appellant Juan stated that the selling price of his land was "P170,000.00 net to me exclusive of the amount of my obligation to the China Banking Corporation where the property is mortgaged", or P190,000.00 including the mortgaged debt of P20,000.00 (pp. 382-384, ROA).
2. Appellants-spouses acquired the lots in 1956 (as claimed by appellants) or 1957 (as stated in the decision of the trial court) from Felipe Nebrija and his children for only P50,000.00.
3. The lots in question were taxed on the basis of an assessment of only P42,120.00.
4. In his letter dated January 2, 1963 to the Provincial Appraisal Committee, appellant Celestino Juan evaluated his lots at approximately P319,374.00.
As a matter of fact, appellant should be bound by his P190,000.00 admission. In the light of the above-mentioned circumstances, the said amount of P190,000.00 is already just and reasonable.
Appellants' claim that they were forced to make the P190,000.00 offer because they were then under a pressing need for money to defray expenses in connection with certain criminal case involving appellant Ana to settle said cases, can hardly invite belief; because (1) appellant Celestino Juan did not aver this alleged urgent need for money in his letter of January 28, 1963, and (2) notwithstanding appellant Juan's claim in that same letter of January 28, 1963 that an interested buyer of the said lots was "ready to sign the contract for a price of P200,000.00 payable in cash or at least a period of ten (10) days," appellant did not dispose of the same to said interested buyer, despite the lapse of ten days — during which he could have had the money — from the receipt by Victor Luis of said letter. Moreover, the same letter belies his alleged dire need for money to settle the alleged criminal cases against his wife for he stated therein that he had then a pending DBP loan application for P4,102,000.00 for a dairy farm, and that by reason of his connection with DBP officials, his application would be favorably considered for P1,000,000.00 with the expropriated property as collateral together with the dairy farm equipment, facilities and stock.
Being a lawyer, appellant Celestino Juan knew that the reputation of his wife and for that matter his family would be better protected and preserved by her acquittal after trial than by settlement of the case (see pp. 107-108, Appellants' brief). Compromise of a criminal case, other than a private offense, does not remove the criminal liability and the concomitant stigma. Settlement of a criminal case, unlike acquittal, will not stop the people from talking about the guilt of the accused therein.
Of course "judicial or non-judicial admissions made by condemnees as to the value of their properties that are to be expropriated should not be deemed conclusive if such admitted value be unjust, because the Constitution imperatively requires the payment of 'just compensation'". But in the instant case, it could hardly be said that the amount of P300,000.00 is unjust to the appellants. The delay in the payment is compensated by the liability for 6% .interest per annum, covering sixteen (16) years — from 1963 to 1979 — on the balance of P200,000.00 (on May 7, 1963, appellants withdrew the P100,000.00 deposit) amounting to P192,000.00. The total balance due appellants would be P392,000.00. The total payment to them then would be P492,000.00. Beyond this price, the value would be excessive and unjust to the State and the taxpayer (27 Am. Jur. 2d 52-53 § 266, footnote 17).
It must be pointed out that the most reliable pieces of evidence in the records relative to the just compensation to be paid herein appellants are those hereinbefore enumerated, namely, appellants' own evaluation in 1963, the acquisition cost the tax assessment. This is so because the Committee failed to arrive at an acceptable valuation, not to mention the fact that the individual reports of the commissioners of the Appraisal Committee did not undergo the indispensable requirement of hearing before the trial court. It must be herein stressed that almost all the evidence enumerated earlier are in the nature of admissions by the owner, whic
h kind of evidence under existing jurisprudence occupies a preferred position in the realm of proof of just compensation and valuation in eminent domain.
Even the purchase price of P50,000.00 paid in 1956 or 1957 by appellants for the lots sought to be condemned in 1963 is generally held admissible as evidence of the lots' fair market value, unless such purchase is too remote in point of time from the condemnation proceedings or more special consideration induced the sale at less than the true market value (29-A C.J.S. 1203-04).
Similarly, the assessed valuation of land made by tax assessors when required by the law, and the owner's own valuation may be considered together with other proofs in the determination of the just value of the lots condemned (29-A C.J.S. 1201-1202).
As aforestated, appellants paid realty taxes on the property on the basis of an assessed valuation of only P42,120.00, with improvements worth only P1,712.00. On January 28, 1963, appellants' offer was P190,000.00, then P300,000.00 on April 24, 1963, as provisional value, after extravagantly claiming that the property is worth the fantabulous price of at least P5,000.00 per hectare or a total of P1,693,040.00. Not even the irrigated rice lands along the national highway in Nueva Ecija, the home province of appellants, could command that price to P5,000.00 per hectare in 1963. And the lands in the case at bar are in La Union, hilly, and away from the national highway without direct access to any feeder road.
In our jurisdiction, the statement of the value of his property by the owner in the tax declaration shall, since 1940 under C.A. No. 530, constitute prima facie evidence of the real value of the property in expropriation proceedings by the Government and its instrumentalities.
In short, it could therefore be said — taking into consideration the acquisition cost of P50,000.00 in 1956 or 1957 of the lots subject matter of the case, the alleged cost of P40,000.00 for levelling, surveying and titling thereof from 1957 to 1959, the assessed value as well as the tax declarations of the appellants with respect to these lots of only P42,120.00, the improvements worth P1,712.00 in 1963, and the several admissions or estimates made by the appellants with respect to the value of the lots ranging from P190,000.00 to P319.374.00 to P300,000.00 to P1,693,040.00 (P5,000.00 per hectare)—that the amount of P300,000.00 is just to appellants, not to mention that in addition to said amount a considerable interest of P192,000.00 for 16 years (1963-1979) would be paid on the unpaid balance of P200,000.00 from May 4, 1963 by the Government, or a grand total of P492.000.00, which is over five (5) times or over 500% their capital investment of P90,000.00 from 1956 to 1959. Anything beyond this amount is grossly excessive and patently unjust to the government and the taxpaying public (29 Am. Jur.2d 52-53 § 266, footnote 17).
It cannot be seriously claimed by appellants that the declarations of value of the lots in Exhibits B and B-1 were not made by them (pp. 346-347, ROA), considering that said tax declarations were made only after the title over the lots was obtained by appellants. Exhibits B and B-1 clearly indicate that appellants and no one else made the said declarations (p. 182, ROA).
Likewise, the valuation of Agriculturist Tadina should not be accorded too much weight for the following reasons: têñ.£îhqwâ£
1. His valuation report is based purely on his own estimate and opinion: hence in his letter to Atty. Ramon Zandueta which embodied his evaluation, he therein stated that "... You will note hereunder the technical analysis of the undersigned with regards to the area under consideration as a personal opinion ..."
2. The factors he considered in evaluating the lots in question could hardly justify this valuation in the amount of P616,000.00. Hence: "The 80 hectares of pasture land if properly grazed and managed is capable of maintaining no less than 400 heads of cattle. The 120 hectares of fruit trees is suitably adapted to cacao, coffee, bananas, mangoes. pineapple, citrus, avocado, rambutan, lanzones, The 78 second growth forest if only planted to "alnos Mirando" a Japanese kind of forest tree will also increase the volume of spring water for irrigation purposes ... The second growth forest land has been evaluated higher than the pasture and fruit tree lands because forest lands do not only conserve soil erosion and soil fertility but also provide organic matter for the irrigated riceland. It will also conserve and promote the development of spring besides the value of the, trees and other forest by-products which are now available as sources of income (pp.39-42,ROA).
3. Tadina is not "an experienced and competent appraiser" in the field of eminent domain or expropriation cases. When cross-examined by the Fiscal of the Province of La Union, he declared that the appraisal he made for the property in Damortis, La Union, and that in Aringay was only with respect to its adaptability and suitability for agriculture and not for purposes of determining the fair and reasonable value (tsn, pp. 505-506, pp. 201, 202, ROA; see also pp. 108-109. ROA). His appointment as Chairman of the Appraisal Committee for public lands in La Union did not qualify him as an "experienced and competent appraiser" in expropriation cases; because lands involved therein are public lands and the appraisal or determination of the fair market value of said lots are not for purposes of expropriation cases (p. 202, ROA). Neither would his participation in the Poro Point expropriation add to his qualifications as an appraiser in expropriation cases, because he was merely therein consulted (p. 202. ROA).
4. His classifications were made by estimates and not by actual measurements (tsn, p. 514; p. 204, ROA).
That the land "had potential for conversion into subdivision" should not be considered in the valuation of the lots in question; because (1) the records of the case do not show conclusive evidence as to the subdivision potentiality of the lots; and (2) as held in Manila Electric Co. v. Tuason, "agricultural land should be appraised as such and not as potential building site" (60 Phil. 663 [1934], reiterated in the case of The Municipal Government of Sagay v. Jison, et al., 104 Phil. 1026, 1033 [1958]).
Republic vs. Castelvi lends no support to appellants' position; because in the Castelvi case, there was a finding by this Court that "... the lands in question had ceased to be devoted to the production of agricultural crops, that they had become adaptable for residential purposes, and that the appellees had actually taken steps to convert their lands into residential subdivisions even before the Republic filed the complaint for eminent domain (p. 355, 58 SCRA).
As already noted above, the individual valuations made by the three commissioners are of little value, if at all; because the same were irregularly prepared, not to mention the fact that the same were not subjected to the indispensable hearing requirement before the trial court — wherein the commissioners could have been cross-examined on their respective reports, the bases thereof, how they reached their conclusions, and their qualifications, and related matters-vital to the credibility, or lack of it, of their valuations.
It is urged that, because the value of the peso at the time of the taking in 1963 by the government of the lots of appellants and the value of the peso today when the just compensation to be awarded to appellants is to be paid, are no longer the same, this factor should be considered in the determination of the final award to be given; and that even if WE consider appellants as having judicially admitted the amount of P300,000.00 as the price of their property, the doubling of this sum at this time is justified.
Actually, under this proposition, the amount to be doubled shou1d only be the balance of P200,000.00, for appellants had ,withdrawn and made use of the P100,000.00 deposited by the government at the inception of this case.
It is of course true that the value of the peso in 1963 and at present is no longer the same. But this does not justify US in considering that factor nor in doubling the amount judicially admitted by appellants; because such contingency is already well-taken care of by the interest to be awarded to appellants. For that is the true role or nature of interest in expropriation cases; because said interest is not contractual in nature nor based on delict or quasi-delict, but one that "runs as a matter of law and follows as a matter of course from the right of the land
owner to be placed in as good a position as money can accomplish, as of the date of the taking" (30 CJS 230). Stated otherwise: "Where the payment of compensation does not accompany the taking of property for public use but is postponed to a later date, the owner of the property is ordinarily entitled to the award of an additional sum which will compensate for delay (cases cited) or which will, in other words, produce the full equivalent of the value of the property paid contemporaneously with the taking" (29-A CJS 762). Under this view, the interest awarded is deemed part of the just compensation required to be paid to the owner (27 Am. Jur, 112). This appears to be prevailing view in the United States. As aptly and clearly explained in one American case:têñ.£îhqwâ£
Article 1 § 18 of the Constitution of the State of Oregon, provides in part as follow: 'Private Property shall not be taken for public use ... without just cornpansation.' The Fifth Amendment to the Constitution of the United States contains substantially the same provision, 'nor shall private property be taken for public use, without just compensation.' In construing this Identical language of the Federal Constitution the Supreme Court of the United States holds as follows: lt is settled by the decision of this court that just compensation is the value of the property taken at the time of the taking (citing cases). And, if the taking precedes the payment of compensation, the owner is entitled to such addition to the value at the time of the taking as will produce the full equivalent of such value paid contemporaneously. Interest at a proper rate is a good measure of the amount to be added' (numerous cases cited omitted). In these cases and others, the proper rate of interest is held to be the legal rate of interest prevailing in the jurisdiction where the land is located. The Supreme Court of West Virginia holds on the authority of these decisions and also of Dohany vs. Rogers, 281, U.S. 362, 50 SGt. 299. 74 L.Ed 904, 68 ALR434, that denial of the right of interest would be a violation of the fourteenth Amendment to the Federal Constitution, Simons v. Dillon, 119 W. VA 284,193 S.E. 331, 113 A.L.R. 787. The following texts are authority for the allowance of such interest as part of the damages sustained by the owner of the land. Nichols on Eminent Domain 653, § 216 (3d ed.); Lewis, Eminent Domain (3d ed.) 1320, § 742; 18 AM JUR., Eminent Domain, § 272 [State vs. Deal, 233 P 2d 242, 251-252, emphasis supplied].
This view is also well-discussed by JAHR in his book, Eminent Domain — Valuation and Procedure (1953 ed.), Chapter XXVIII — Payment of Compensation, pp. 286-301; and by ORGEL in his book, Valuation Under Eminent Domain, Vol. I (1953 ed.) on the subject of interest as part of just compensation and as a penalty for delay in payment (Sec. 5, pp. 19-33).
In this jurisdiction, a study of the cases decided by this Court with respect to the award of interest to the condemnee where there is a gap of time between the taking and the payment, shows that We tend to follow the view just discussed. The first case-it would appear-where the question of interest arose in this jurisdiction was the Philippine Railway Co. vs. Solon, February 20, 1909, 13 Phil. 35-45. The two issues taken there in connection with interest were: (1) From what time should interest be reckoned, from time of the taking possession of the property by the government or from judgment of the trial court; and (2) whether on appeal, appellant-condemnee is entitled to interest during the pendency of the appeal. In disposing of the issues, the Court, relving heavily on American jurisprudence, appears to treat interest as part of just compensation and as an additional amount sufficient to place the owner "in as good a position as money can accomplish, as of the date of the taking." Thus, the Court declared: têñ.£îhqwâ£
It remains to consider what interest the defendant is entitled to from named date. It appears from the record that thecompany opposed the confirmation of the award. Its objections were so far successful that the court reduced the amount awarded by the commissioners. The owner was compelled to appeal and in his appeal has been so far successful as to reverse the action of the the court below. Under these circumstances we think he is entitled to interest on the award until the final determination of this proceeding. What the result would be if he had failed in his appeal, we do not decide. The interest thus allowed will be interest upon the amount awarded by the commissioners from the 2nd day of February, 1907, until payment (13 Phil. 40-44, emphasis supplied).
The Solon case thereafter became the basis of award of interest on expropriation cases like Philippine Railway v. Duran, 33 Phil. 159 [1916]; Manila Railroad Co. v. Alano, 36 Phil. 501 [1917]; Manila Railroad Co. v. Attorney General, 41 Phil. 177 [1920]; Alejo v. Provincial Government of Cavite, 54 Phil. 304 1930]; Tayabas v. Perez, 66 Phil. 470 [1938]; Republic v. Gonzales, 94 Phil. 957 [1954]; Republic v. Lara, 96 Phil. 172 [1954]; Phil. Executive Commission v. Estacio, 98 Phil. 219 [1956]; Republic of the Philippines v. Deleste, 46 al., 99 Phil. 1035 [1956] Republic v. Garcellano, 103 Phil. 237 [1958]; Yaptinchay, 108 Phil. 1053 [1960]; Republic v. Tayengco, 19 SCRA 900 [1967],and many others, until the matter of payment of interest became an established part of every case where taking and payment were not contemporaneously made.
And finally, We confirmed our adherence to the prevailing view in the United States when in the case of Urtula vs. Republic, January 31, 1968, 222 SCRA 477, 480), We declared, through Mr. Justice J.B.L. Reyes, that: têñ.£îhqwâ£
... Said interest is not contractual, nor based on delict or quasi-delict, but one that— têñ.£îhqwâ£
runs as a matter of law and follows as a matter of course from the right of the landowner to be placed in as good a position as money can accomplish, as of the date of the taking'" (C.J.S. 230; see also Castelvi case, supra, and Republic v. Nable-Lichauco, 14 SCRA 682).
In this connection, it must be pointed out that the judicial notice taken by this Court in the Castelvi case (supra, 363) "... of the fact that the value of the Philippine peso has considerably gone down since the year 1959," was premised not on the par value of the peso to the dollar, but on the dollarpeso exchange rates at the time of the taking of the lots and at the time of the payment thereof.
In the case of Manuel & Co. vs. CB (38 SCRA. 533-542 [1971]), We distinguished between par value of the peso and the dollar-peso exchange rate. The par value of the peso to the dollar-two pesos to one dollar-is fixed by law and remains intact (see 48, R.A. 265, 1948; Sec. 6, CA No. 699, 1945). Hence, while there was a change of the exchange rate, the par value of the peso as established by law remains unchanged.
Such par value can only be altered by the President of the Philippines upon proposal of the Monetary Board with five members concurring and approved by Congress (Sec. 49[3] RA No. 265).
On the other hand, the rate of exchange or exchange rate is the "price, or the indication of the price, at which one can sell or buy with one's own domestic currency a foreign currency unit. Normally, the rate is deterniined by the law of supply and demand for a particular currency" (38 SCRA 533-542).
It is submitted that the Castelvi doctrine on the value of our peso is of doubtful legality, considered in the context of the Central Bank case, above discussed. In effect, the Castelvi ruling has devalued our peso; a case of devaluation by judicial fiat.
In the light of the foregoing, the de facto devaluation of our peso should not be taken into account in the final determination of the value of the lots, subject matter of the case.
In the 1970 case of Dizon-Rivera v. Dizon (33 SCRA 554-557 [1970]), WE ruled against appellants and held that the decrease in the purchasing value of the Philippine peso provides no legal basis or justification for completing their legitime with real properties of the estate instead of being paid in cash, reasoning thus: têñ.£îhqwâ£
Neither may the appellants legally insist on their legitime being completed with real properties of the estate instead of being paid in cash, per the approved project of partition. The properties are not available for the purpose, as the testatrix had specifically partitioned and distributed them to her heirs, and the heirs are called upon, as far as feasible to comply with and give effect to the intention of the testatrix as solemnized in he
r will, by implementing her manifest wish of transmitting the real properties intact to her named beneficiaries, principally the executrix-appellee. The appraisal report of the properties of the estate as filed by the commissioner appointed by the lower court was approved in toto upon joint petition of the parties, and hence, there cannot be said to be any question-and none is presented-as to fairness of the valuation thereof or that the legitimate of the heirs in terms of cash has been understated. The plaint of oppositors that the purchasing value of the Philippine peso has greatly declined since the testatrix death in January, 1961 provides no legal basis of justification for overturning the wishes and intent of the testatrix. The transmission of rights to the succession are transmitted from the moment of death of the decedent (Article 777, and accordingly, the value thereof must be reckoned as of then, as otherwise, estates would never be settled if there were to be a revaluation with every subsequent flucluation in the values of the currency and properties of the estate. There is evidence in the record that prior to November 25, 1964, one of the oppositors, Bernardita, accepted the suin of P50,000.00 on account of her inheritance, which, per the parties' manifestation, "does not in any way affect the adjudication made to her in the projects of partition." The payment in cash by way of making the proper adjustments in order to meet the requirements of the law on non-impairment of legitimes as well as to give effect to the last will of the testatrix has invariably been availed of and sanctioned see Articles 955, 1080 and 1104, Civil Code). That her co-oppositors would receive their cash differentials only now when the value of the currency has declined further, whereas they could have received them earlier, like Bernardita, at the time of approval of the project of partition and when the peso's purchasing value was higher, is due to their own decision of pursuing the present appeal (emphasis supplied).
Additional distinction between the present case and the Castelvi case:
The proceedings before the commissioners and before the trial court in the Castelvi case were all in accordance with the provisions of the rules, while this is not so in the present case; because the commissioner's herein did not turn out a valid report, as the commissioners made their own and separate reports and no consensus was reached by them on the classification of the lots, allocation of areas to each class, and the fair market value of each class and the lots as a whole. Furtherinore, no hearing on the reports of the commissioners was made by the trial court in the case at bar, because of the motion of the herein appellants to submit the same without any (hearing).
The finding of the trial court, which was sustained by this Court, that the lots involved in the Castelvi case were residential, was supported by and based on the factual findings of the commissioners, who were unanimous thereon, and the Provincial Appraisal Committee of Pampanga (58 SCRA 356-359): while in the present case no one among the commissioners classified the lots or any portion thereof as residential or one with residential/subdivision potentiality. With respect to Provincial Board Resolution No. 13 on the report of the Provincial Appraisal Committee of La Union, the same was disregarded tor having been passed in haste.
In the present case, commissioner Balagot classified the two lots into irrigated riceland, upland riceland, orchard land, pasture land and forest land, Commissioner Rojas similarly classified the lands as above, but adding thereto forestry compound and barrio compound; while Commissioner Molina classified the lots into unirrigated riceland, upland riceland and pasture land. It cannot be seriously claimed that the lots involved in the present case is suitable as, or have potentials tor conversion into, a residential subdivision simply because a 4-hectare area of the same was considered by a member of the provincial appraisal committee as residential. In fact, said 4-hectare area was reflected in the Provincial Appraisal Committee Report, Resolution 13 (Exh. A) as grazing land, not as a residential one (see pp. 138, 173, ROA; pp. 67, 143, Appellants' Brief). Furthermore, none among the commissioners believed the testimony of the said member on that point as no one among them classified the lots or any portion thereof as residential. The fact that the tenants of appellants previously occupied the said area and constructed houses thereon, does not convert the whole area or the portion thus occupied into a residential one. The residential nature of the lot is not determined alone by the presence or absence of houses thereon (Republic v. Garcia, 91 Phil. 46 [1952]). The determination of the true nature of a lot must take into consideration, among other things, the location topography, kind of soil fertility or productivity, and surroundings of the lot (Manila Railroad Co. Caligsihan, 40 Phil. 326 [1919]; Republic v. Garcia, supra: Republic v. Lara, 50 O.G. 5778 [1954]). Indeed, the evidence relied upon by this Court in concluding that the lots involved in the Castelvi case are residential and not agricultural, shows that: têñ.£îhqwâ£
... Castelvi broached the Idea of subdividing her land into residential lots as early as July 11, 1965 in her letter to the Chief of Staff of the Armed Forces of the Philippines (Exh. 5-Castelvi). As a matter of fact, the layout of the subdivision plan was tentatively approved by the National Planning Commission on September 7, 1956. (Exh. 8-Castelvi). The land of Castelvi had not been devoted to agriculture since 1974 when it was leased to the Philippine Army. In 1957 said land was classified as residential, and taxes based on its classification as residential had been paid since then (Exh. 13-Castelvi). The location of the Castelvi land justifies its suitability fora residential subdivision. As found by the trial court, "It is at the left side and the entrance of the Basa Air Base and bounded on two sides by roads (Exh. 13-Castelvi; paragraphs 1 and 2, Exh. 12-Castelvi), the poblacion (of Floridablanca,) the municipal building, and the Pampanga Sugar Mills are close by. The barrio schoolhouse and chapel are also near (Tsn., Nov. 23, 1960, p. 68).
The land of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the land of Castelvi. They are also contiguous to the Basa Air Base, and are along the road. These lands are near the barrio school house, the barrio Chapel, the Pampanga Sugar Mills, and the Poblacion of Floridablanca (Exhs. 1, 3 and 4-Toledo-Gozun). As a matter of fact, regarding Lot 1-B, it had already been surveyed and subdivided, and its conversion into a residential subdivision was tentatively by the National Planning Commission on July 8, 1959 Exhs. 5 and 6-Toledo-Gozun). As early as June, 1958, no less than 32 men connected with the Philippine Air Force among them commissioned, officers, non-commissioned officers, and enlisted men had requested Mr. and Mrs. Joaquin D. Gozun to open a subdivision on their lands in question (Exhs, 8, 8-A to 8-ZZ-Toledo-Gozun)" (58 SCRA 357, emphasis supplied).
In the present case, there is no evidence in the record warranting a conclusion that the parcels involved have potentials for conversion into a residential subdivision. On the contrary, the location, topography and the use to which the lots involved were, devoted at the time of the filing of expropriation proceedings in the lower court, indicate that they have none. In his report, Commissioner Molina described the location and topography of the lots as follows: têñ.£îhqwâ£
... Starting from the town propwer of Bacnotan, one can reach the property by passing through the barrios of Cabaroan, Sayoan, Salincob, Casianan and finally Sapilang. The place is about 2.5 kilometers north of the the Poblacion along the National Highway up to the so-called Cabaroan junction. From this junction is about a 2-kilometer feeder road going eastward. And from this lateral road is an unsurfaced road of approximately 1.5 kilometers leading to the site of the Agricultural School. However, before the school took possession of the land on May 4, 1963, the place was not accessible at all by any motor vehicles, and that the only means was to hike over paddies, trails and creeks.
Topographically, the property of defendants is situated on a high elevation. It consists of mountains and hills forming a semi-circle, and sloping on the sides towards an elongated portion of valley-like depression which is level and developed into ricefields. Because of its high elevation or location, the climate of the place ishealthful, temperate and especially invigorating when one
is near or within the vicinity of the waterfall or spring. The climate is of the kind which the Weather Bureau would call the Type I climate; that is, the place has two distinct reasons, a dry season from December to June, when there are light rains or no raisn at all, and wet season, from June to December, when rains are abundant, heavy and frequent. The soil of the place is good. It has a luxuriant vegetation (pp. 69-70, ROA, emphasis supplied).
The presence of the houses of twenty-three (23) tenants in a 4-hectare area at the time the government took possession of the lots herein involved, is not sufficient proof of that portion's potentialitv for conversion into a residential subdivision, much less of the whole parcel of about 338 hectares. There was no evidence that the houses of the tenants were there constructed because of its residential nature. In all likelihood, the tenants were forced by necessity to construct their Rouses therein to be close to their respective tobacco farms. The fact that under the leasehold system of land tenure, a tenant is allotted a portion for his dwelling does not render the entire landholding no longer agricultural and thereby convert the same into a residential land.
WHEREFORE, THE JUDGMENT APPEALED FROM IS HEREBY MODIFIED AND THE PLAINTIFFAPPELLEE REPUBLIC OF THE PHILIPPINES IS HEREBY DIRECTED TO PAY THE DEFENDANTSAPPELLANTS CELESTINO C. JUAN AND ANA TANSECO THE SUM OF TWO HUNDRED THOUSAND (P200,000.00) PESOS, WITH INTEREST AT THE LEGAL RATE OF SIX PERCENT (6%) PER ANNUM FROM MAY 1, 1963. NO COSTS.
Fernandez, Guerrero, Abad Santos, De Castro and Melencio-Herrera, JJ., concur.1äwphï1.ñët
Concepcion Jr. and Santos, JJ., took no part.
Separate Opinions
FERNANDO, C.J., concurring:
Concurs in the opinion of Justice Makasiar as to the legal parts involved and in the opinion of Justice Teehankee as to the accounts due appellants.
BARREDO, J., dissenting:
I cannot find sufficient evidence to "lorm a clear picture of the classification the anocation of areas as to each class and the fair market value of each class of land. The reports of the comnmissioners are so disparate, no conclusion can be deduced from them. In other words, We do not have enough basis for a fair judgment.
AQUINO, J., dissenting:
I vote for the affirmance of the lower court's judgment.
TEEHANKEE, J., concurring:
I concur with the main opinion of Mr. Justice Makasiar which rejects the appraisal of defendants-appellants' expropriated property by provincial agriculturist Pio Tadina (who was not even appointed by the lower court) in the sum of P616,000.00 as urged by defendants-appellants, whereby plaintiff-appellee Republic of the Philippines would have to pay defendants- appellants (after crediting the sum of P100,000.00 deposited by plaintiff and received by defendants) the further balance of P516,000.00 with 6% interest per annum from May 4, 1963 the date when plaintiff took possession of rhe expropriated property and would amount to a total of well over One Million Pesos (P1,000,000.00).
I maintain that defendants-appellants' own valuation of property given in the expropriation proceeding itself is binding on them and sets the limit of the compensation to be awarded them regardless of the patently extravagant and exssive appraisals of some of the court-appointed commissioners.
Here defendant-appellant Celestino C. Juan himself in the negotiations for the sale of his property to the State for use as a school site offered it for the price of P190,000.00 (P170,000.00 plus bank loan of P20,000.00), with a down payment of P90,000.00 and the balance of P100,000.00 payable within one year, as per his letter of January 28, 1963. He increased this -aluation further to P300,000.00 in his motion for reconsideration of April 24, 1963. This last evaluation judicially given by defendants-owners is a declaration and admission binding on them, 1 unless they can show that they were laboring under an error of fact. No such error has been shown by defendantsappellants. Nor has any compelling reason been given to justify their being relieved from the binding effects of such admission.
The P616,000.—valuation urged by defendants-appellants amounts therefore to double the very valuation of P300,000.00 given by and binding on themselves, exceeding the same by P316,000.00, excluding 90%, interest at 6% per annum for 16 vears since 1963 that would have to be paid.
There is no justification for awarding to the owners double the amount of their own valuation of their property. On the contrary the facts of record bear out that awarding to the owners the compensation set by themselves in the amount of P300,000.00 (Pl10,000.00 more than the original amount asked by them and awarded by the lower court) is a just and reasonable compensation, to wit, the property was bought in 1957 by defendants for P50,000.00 only and the value of their improvements thereon amounted to only Pl,712.60 as of 1963, it is certainly doubtful and contrary to experience that the property would increase in value over 12 times to P616,000.00 whereas the increase in 6 years to P300,000.00 as per the owners' own valuation withou their having done anything to improve the property is quite an optimistic valuation); the property is about six (6) kilometers away from the poblacion of Bacnotan and when the government took possession of the same on May, 4, 1963, it was not accessible at all by motor vehicle and could be reached only by hiking through rice paddies, trails and creek; that it was not fully developed with 95 hectares of pasture land and 70 hectares of forest land and an assessed valuation of P42,120.00.
The only justification cited for granting an amount double the owners' own valuation of the property is that the value of the peso has gone down and continues to decline.
Such decline provides no valid basis or justification for doubling the fair and just price of P300,000.00 representing defendants-appellants' own judicially admitted valuation of their property (increased in four [4] months by P110,000.00 compared to their original offer to sell the same to the government for only P190,000.00, supra at page 1 hereof). It is settled law that the expropriation price to be considered is that at the beginning of the expropriation and taking of possession. That defendants should now receive the balance of P200,000.00 with legal interest when the value of the peso has declined is due to their own decision of pursuing the present appeal. (See DizonRivera vs. Dizon, 33 SCRA 554, 568). There is no claim of extraordinary, inflation such as to make applicable Article 1250 of the Civil Code providing that "the value of the currency at the time of the establishment of the obligation shall be the basis of payment." Aside from the fact that this article is applicable only to contractual obligations, neither the competent Executive and monetary authorities nor this Court have ever admitted or declared that the factual assumption of said article (extraordinary inflation) has come into existence. (Velasco vs. Meralco, 42 SCRA 556). The onerous and adverse consequences of such a declaration on the national economy and stability of its finance and currency and on the great majority of average and fixed wage-earners in relation to their contractual debts and obligations are too staggering to contemplate.
Finally, there is no reason to disregard the general rule enunciadated in Republic of the Philippines vs. Narciso, 2 that "the owners' valuation of the property may not be binding on the Government or the court, but is should at least set a ceiling price for the compensation to be awarded. Moreover, the prices to be considered are those at the beginning of the expropriation not the increased values brought about by the improvements and actuations of the Government after occupying the premises.
ACCORDINGLY, I vote for limiting the increase in compensation to be awarded to defendant appellants to the valuation set by themselves as owner in the amount of P300,000.00 with 6% interest per annum on the balance of P200,000.00 from May 4, 1963, which would bring the total exproprriation value to close to Five Hundred Thousand Pesos (500,000.00) or ten times the original price paid therefor by defendants-appellants.
ANTONIO, J., dissenting:
I dissent from the main opinion of my distinguished colleagues for the following reasons:
/>
(1) Celestino Juan, in making the admission of P300,000.00 as the value of the property, was referring, not to a fair or just, but to a provisional value of his property. The sum was stated four (4) times in his "Urgent Motion for Reconsideration And Or to Lift Writ of Possession, 1 but there is no mistaking that he was referring merely to a provisional value so that the Republic could obtain immediate possession of the property. têñ.£îhqwâ£
... It must be considered, however, that the amount fixed as the provisional value of the lands that are being expropriated does .iot necessarily represent the true and correct value of the land. The value is only "provisional" or "tentative", to serve as the basis for the immediate occupancy of the property being expropriated by the condemnor... (Republic v. Castellvi, L-20629, Aug. 15, 1974, 58 SCRA 336. 359.)
Celestino Juan should thus be considered as having judicially admitted P300,000.00 merely as the provisional value of his property and should not be bound by such ,value as the true value.
Nor may Juan be bound to his proposal to the principal of the agricultural school in the sum of P190,000.00 as the selling price of his land because when he tendered the proposal he was in urgent need of money to defray expenses in connection with certain criminal cases involving his wife. 2
(2) Judicial or non-judicial admissions made by condemnees as to the value of their properties that are to be expropriated should not be deemed conclusive if such admitted value be unjust, because the Constitution imperatively requires the payment of "just compensation." têñ.£îhqwâ£
Sec. 2. Private property shall not be taken for public use without just compensation. (Constitution, Article IV, Bill of rights.)
(3) There is, moreover, the circumstance that a portion of the land had potential for conversion into a subdivision. In fact, a 4-hectare area was considered by a member of the Provincial Appraisal Committee as residential; it was occupied by tenants who built their houses thereon. 3 têñ.£îhqwâ£
We agree with the findings, and the conclusions, of the lower court that the lands that are the subject of expropriation in the present case, as of August 10, 1959 when the same were taken possession of by the Republic, were residential lands and were adaptable for use as residential subdivisions. Indeed, the owners of these lands have the right to their value for the use for which they would bring he most in the market at the time the same. were taken from them... (Republic v.Castellvi, supra, at p. 358.)
(4) The appraisal by Provincial Agriculturist Tadina in the sum of P616,000 appears to be the most realistic and reliable. He was an experienced and competent appraiser, and he undertook the appraisal impartially, as he did so in an official capacity and without the knowledge of Celestino Juan. 4
(5) The mean value of the individual evaluations made by the three (3) Commissioners substantially accords with, or even surpasses, the amount recommended by Tadina, to wite:têñ.£îhqwâ£
Atty. Rogelio Balagot, Chairman and Representative of the Court......................................................................................................P1,045,876.30
Atty. Eufemio Molina, for the Plaintiff...................................135,000.00
Atty. Pablito Rojas, for the Defendants.............................1 ,407,856.00 têñ.£îhqwâ£
P2,588,732.30
P2,588,732.30 divided by 3 = P862,910.77
(6) Finally, it cannot be denied that the purchasing power of the peso has, in the meantime, depreciated. têñ.£îhqwâ£
... This Court has also taken judicial notice of the fact that the value of the Philippine peso has considerably gone down since the year 1959... (Republic v. Castellvi, supra, at p. 363.)
The ceiling conversion rate of the peso to the dollar in 1963 when the Republic took possession of the property was P3.20 to $1.00; 5 the inter-bank guiding rate for January 20, 1975 was P7.0705, 6 more than double that in 1963; on January 20, 1975, the foreign exchange rate was $1,00 for P7.32; 7 so that even if Celestino Juan is to be considered as having judicially admitted the price of his property in the sum of P300,000.00 (which admission is, as previously stated, qualified or non-categorical), the doubling of this sum at this time is justified.
In contrast to the foregoing, land values have considerably appreciated anc continue to increase.
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